What changed
Previously, only direct membership was allowed for RTGS and NEFT, with RRBs getting a special exception via sponsor banks. Now, any licensed bank with the necessary tech can become a sub-member through a sponsor bank, subject to conditions like core banking compliance and sponsor responsibility for settlement and complaints.
What it means for you
Smaller banks, co-operatives, and RRBs can now access national payment systems without the high cost or strict criteria of direct membership. Sponsor banks take on settlement and compliance risks, so they must tighten their risk management and monitoring frameworks.
What you must do
- Assess if your bank can act as a sponsor or needs sub-membership based on tech readiness and cost.
- If sponsoring, develop a Board-approved risk management framework and monitor sub-members continuously.
- Ensure sub-member branches are under core banking before allowing them to use RTGS/NEFT.
- Set up a robust customer complaint redressal mechanism for sub-member transactions.
- Report any suspicious transactions or rule violations by sub-members to RBI immediately.
Who it affects
All scheduled commercial banks including RRBs, Urban co-operative banks, State co-operative banks, District central co-operative banks, Sponsor banks (direct members of RTGS/NEFT)
Can any bank become a sub-member of RTGS/NEFT?
Yes, any licensed bank with the technological capability can become a sub-member through a sponsor bank that is a direct member. This is an alternative for banks that don't meet direct membership criteria or find it too costly.
What are the key responsibilities of a sponsor bank?
The sponsor bank handles all transaction messaging, settlement through its own RBI account, risk management, customer complaint redressal, and must ensure sub-members follow all RBI rules. It also reports any fraud or rule violations to RBI.
Are there any restrictions on sub-member branches?
Yes, branches not under core banking system cannot participate in centralised payment systems until they are brought under core banking. This ensures timely credit and return discipline.