The Reserve Bank Of India has issued detailed guidelines for “on tap” authorisation of New Retail Payment Systems in India. The apex bank had previously published a policy paper on “Authorisation of New Retail Payment Systems” in January earlier this year and invited public comments on the same.
RBI issued the policy paper with the objectives of minimising the concentration risk in the retail payments market, by promoting innovation and competition in the payments sector in India.
It issued a circular on October 15 listing instructions on ‘on tap’ authorisation to entities desirous to function/operate/provide platforms for Bharat Bill Payment Operating Unit (BBPOU); Trade Receivables Discounting System (TReDS); and White Label ATMs (WLAs).
The circular asserts that all the operators should ensure interoperability among different retail payment systems. The listed instructions included the following statutory capital and other related requirements for each of the retail payment systems:
The Applicants for BBPOUs must have a domain experience in the field of bill collection for a minimum period of one year and maintain a Net worth Rs 100 crore at all times. Whereas WLA Operators are required to deploy ATMs in the ratio of 1:2:3 for Metro & Urban: Semi-Urban: Rural regions respectively.
RBI has kept the ratio in favour of rural regions giving the WLA operators a leeway. They’re allowed to skip deploying ATMs in urban areas after meeting their quota of ATM deployment in rural areas. They also have to maintain the same minimum capital as BBPOUs at Rs 100 crore.
On the other hand, applicants for TReDS will need to have a minimum paid-up equity capital of Rs 25 crore and requiring non-promoters, to have a stake of 10% in the equity capital.
Apart from the specific capital requirements, all applicants for each of the retail payment systems are required to get RBI authorisation which would be given based on both the merits of the proposal as well as on the central bank’s assessment of the potential for new companies in that particular segment.
All operators are required to follow KYC requirements as per the Master Directions on KYC issued by the Department of Banking Regulation (DBR).
The circular invited applications for receiving on-tap authorisation to new payment system operators to be submitted to the Chief General Manager, Department of Payment and Settlement Systems.
The policy paper had mentioned that the RBI’s regulatory framework has “recognised the increasing contribution of non-banks in the payments domain” and the new guidelines were issued to support onboarding of new players in the sector.