The Reserve Bank of India (RBI) Monday planned to relax norms for entry of new players in the trade payment systems with a view to giving a boost to modernization and competition. The RBI has been issuing guidelines for various payment systems and grants authorization to non-banks for setting up and operating payment systems.
Licensed banks also need to obtain precise permission from Reserve Bank for setting up and operating a payment system. At the end of 2018, there were 89 authorized non-bank Payment System Operators (PSOs). The RBI's policy paper on 'Authorization of New Retail Payment Systems' proposes a multi-pronged policy action for a more suitable level of retail reimbursement systems and operators.
With regard to entry point norms for an entity, the paper said a judicious approach needs to be adopted with regard to net worth criteria. "For all payment systems it would be attractive that they have (a) physical presence in the country, (b) faultless track record, and (c) are likely to be conventional to the best overall standards, including those pertaining to customer service and efficiency," the paper said.
It also makes a case for configuration of the authoritarian framework to encourage enhanced participation of both bank and non-bank entities. Earlier in June last year, the RBI had announced that it would encourage more players to participate in and promote pan-India payment platforms and would bring out a policy paper. The objective, it said was to minimize the concentration risk in the retail payments market from a financial stability perspective and to give a fillip to innovation and competition. The central bank has invited comments on the policy paper by February 20.
