What changed
RBI has opened direct membership in RTGS and NEFT to authorised non-bank PSPs, including PPI issuers, card networks, and white label ATM operators, in the first phase. This follows the April 2021 policy announcement and modifies the 2017 Master Directions on Access Criteria for Payment Systems. The circular takes effect from July 28, 2021.
What it means for you
Non-banks can now settle payments directly in central bank money, cutting out intermediary banks and reducing settlement risk. For lenders, this may reduce fee income from providing payment services to non-banks, but it also lowers the operational burden and counterparty risk. The move aligns with global trends toward access neutrality and could accelerate digital payment adoption.
What you must do
- Review your current payment service agreements with non-bank PSPs to assess potential revenue impact.
- Update risk management frameworks to account for non-banks as direct CPS participants.
- Monitor RBI's FAQs and any further phased expansions for new eligible entities.
- Engage with your treasury and operations teams to understand implications for settlement flows.
Who it affects
Authorised non-bank payment system providers (PPI issuers, card networks, WLA operators), Banks currently providing payment and settlement services to non-banks, RBI's RTGS and NEFT system operators
Which non-banks are eligible for direct CPS access in the first phase?
PPI issuers, card networks, and white label ATM operators that are authorised as payment system providers.
What are the key benefits for non-banks getting direct access?
Lower payment costs, reduced dependence on banks, faster settlement, and elimination of uncertainty in finality since settlement is in central bank money.
Does this circular affect banks' existing roles in payment systems?
Banks remain key participants, but they may lose some fee income from providing settlement services to non-banks. However, systemic risk is reduced as non-banks no longer rely solely on banks for payment finality.