RBI reviews FEMA to boost cross-border INR transactions
The Reserve Bank of India, in collaboration with the central government, has reviewed current regulations under the Foreign Exchange Management Act, 1999.
The Reserve Bank of India (RBI) has decided to allow payment system providers, prepaid card issuers, card networks and white label ATM operators access to its Centralised Payment Systems (CPS), such as real time gross settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems.
This would be the the first phase of its plan to bring non-banks in the same platform.
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In April, RBI had said that it would encourage participation of non-banks in Reserve Bank of India-operated Centralised Payment Systems (CPS) – RTGS and NEFT systems – in a phased manner.
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Direct access for non-banks to CPS lowers the overall risk in the payments ecosystem.
It also brings advantages to non-banks like reduction in cost of payments, minimising dependence on banks, reducing the time taken for completing payments, eliminating the uncertainty in finality of the payments as the settlement is carried out in central bank money among others.
The risk of failure or delay in execution of fund transfers can also be avoided when the transactions are directly initiated and processed by the non-bank entities.
“On a review of extant arrangements and after detailed discussions with Payment System Providers (PSPs), it is advised that, in the first phase, authorised non-bank PSPs, viz. PPI Issuers, Card Networks and White Label ATM Operators shall be eligible to participate in CPS as direct members,” it said in a circular.
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