Soon financial entities other than banks can offer Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) facilities. The Reserve Bank of India (RBI), in its monetary policy review, said that in a bid to boost digital payments, non-banks like fintech and payment banks can soon offer the RTGS and NEFT facility. This facility up until now was exclusively offered by banks.
The central bank has announced that it will allow non banks entities like prepaid instruments issuers, card networks and white level ATMs. These facilities will now also be offered through the trade platforms operated by the RBI, the central bank governor said. This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments, as per the RBI governor’s statement.
The central bank will come up with the detailed guidelines as how these facilities will be extended to new players.
“It is now proposed to enable non-bank payment system operators like Prepaid Payment Instrument(PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms regulated by the Reserve Bank, to take direct membership in Centralised Payment Systems(CPSs)” said Das in the press briefing.
These entities will, however, not be eligible for any liquidity facility from the Reserve Bank to facilitate settlement of their transactions in these CPSs. Necessary instructions will be issued separately.
While NEFT has been one of the biggest enablers for digital retail money transfers typically for smaller amounts in banks, the RTGS facility allows transfer of larger amounts and is mostly used by the businesses. To enhance the access RBI had earlier made the availability of both RTGS and NEFT facilities available 24/7.