RBI permits RTGS and NEFT money transfer facilities extending beyond banks

Reserve Bank of India (RBI) has extended the National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) facilities to non-bank payment system operators. Till now, only banks were allowed to use RTGS and NEFT payments facilities. Now, Prepaid Payment Instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms can use NEFT and RTGS modes.

RBI Governor Shaktikanta Das said, "Membership to the RBI-operated Centralised Payment Systems (CPSs) – RTGS and NEFT – is currently limited to banks, with a few exceptions. 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 CPSs. This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments."

The aim is to encourage participation of non-banks across payment systems, the central bank said. "This facility is expected to minimize settlement risk in the financial system and enhance the reach of digital financial services to all user segments. 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," a statement by RBI mentioned.

The central bank also increased the maximum end of day balance for payment banks to ₹2 lakh. Earlier, the limit was ₹1 lakh. Payments banks have been asking for a hike in deposit limit for a long time.