What changed
Previously, RBI granted authorisation to payment system operators for fixed periods up to five years, requiring periodic renewals. Now, both new and existing PSOs will receive perpetual validity, subject to conditions. Existing PSOs will be assessed for perpetual CoA at their next renewal, provided they meet all compliance, capital, networth, and grievance redressal requirements.
What it means for you
For banks and non-bank PSOs, this eliminates the administrative burden and uncertainty of frequent renewals, allowing longer-term business planning. However, perpetual validity is conditional—any non-compliance can lead to restrictions or revocation. Lenders should note that PSOs with perpetual CoA still face rigorous ongoing supervision, and those failing conditions get only one-year renewals before possible withdrawal.
What you must do
- Review your PSO's current compliance with all authorisation conditions, including capital and networth norms.
- Ensure customer grievance redressal mechanisms are robust and documented for RBI scrutiny.
- Monitor for any adverse reports from RBI or other regulators that could affect perpetual validity.
- If your PSO is due for renewal, prepare to demonstrate full compliance to qualify for perpetual CoA.
Who it affects
All authorised non-bank payment system operators, Banks with payment system operations, New entities applying for payment system authorisation, RBI supervisory teams handling PSO oversight
What happens if an existing PSO does not meet all conditions for perpetual validity?
Such PSOs will receive a one-year renewal to enable compliance. If they fail to comply within a reasonable time, their authorisation may be withdrawn.
Can a PSO lose its perpetual CoA after receiving it?
Yes. If an entity becomes non-compliant with any condition, RBI may impose restrictions or revoke the CoA under the PSS Act.
Does this circular apply to new PSO applicants as well?
Yes. Both new and existing PSOs will now be granted authorisation on a perpetual basis, subject to usual conditions.