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RBI Tightens Rules on Takeover and Sale of Non-Bank PSOs

Current · Source: Reserve Bank of India · RBI/2022-23/80 · issued 04 Jul 2022 · ~2 min read
Quick answerNon-bank PSOs must now get RBI's prior approval for any takeover, acquisition of control, or sale/transfer of payment activity to an unauthorised entity. Changes in management or transfers to authorised entities require intimation within 15 days. RBI aims to respond within 45 days.
The rule, in the simplest words
How it plays out — a real example

A branch operations officer in Indore is reviewing a loan request from a local non-bank PSO that wants to sell its payment gateway business to a new fintech startup. The officer checks the new rules and tells the PSO, 'You must first get RBI's approval before selling, because the startup is not yet authorised for payment activities. I cannot process your loan until you show me that approval.'

What changed

RBI has mandated prior approval for non-bank PSOs in cases of takeover or acquisition of control, even if management doesn't change, and for sale or transfer of payment activity to an entity not authorised for similar activity. Previously, such requirements were scattered across various guidelines; now they are consolidated and made explicit. Additionally, non-bank PSOs must inform RBI within 15 calendar days of any change in management or directors, or when selling/transferring payment activity to an already authorised entity.

What it means for you

Banks and lenders dealing with non-bank PSOs must ensure that any acquisition or transfer of payment system activities gets RBI's green light beforehand, adding a layer of regulatory compliance. This reduces risk of unapproved changes in control and ensures continuity of oversight. For banks acquiring a non-bank PSO's payment activity, they must apply to RBI and may be held liable for past regulatory actions of the seller.

What you must do

Who it affects

Non-bank Payment System Operators (PSOs), Banks acquiring or selling payment system activities, Lenders financing acquisitions of non-bank PSOs, Compliance teams at banks and NBFCs dealing with PSOs

❓ Common questions

What triggers the need for prior RBI approval under this circular?

Prior approval is needed for any takeover or acquisition of control of a non-bank PSO, even if management doesn't change, and for sale or transfer of payment activity to an entity not authorised for similar activity.

What is the timeline for RBI to respond to an application?

RBI will endeavour to respond within 45 calendar days after receiving complete details from both the entities, except for cases involving overseas principals under the Money Transfer Service Scheme.

What happens if a non-bank PSO sells its payment activity to an already authorised entity?

In such cases, prior approval is not needed, but the non-bank PSO must inform RBI within 15 calendar days. The seller must also voluntarily surrender its Certificate of Authorisation.

📜 Read the original circular — full text as issued by RBI
RBI/2022-23/80 CO.DPSS.POLC.No.S-590/02-14-006/2022-23 July 04, 2022 The Chairman / Managing Director / Chief Executive Officer Bank and Non-bank Payment System Operators (PSOs) Madam / Dear Sir, Requirement for obtaining prior approval in case of takeover / acquisition of control of non-bank PSOs and sale / transfer of payment system activity of non-bank PSO A reference is invited to Reserve Bank of India (RBI) instructions contained in paragraph 5.10 of Master Directions on Prepaid Payment Instruments dated August 27, 2021 , paragraph 5.2 of Guidelines on Regulation of Payment Aggregators and Payment Gateways dated March 17, 2020 and paragraph 3.1 of Annex-A to White Label ATM Guidelines dated June 20, 2012 . 2. The operations of non-bank PSOs (authorised to operate any Payment System) have been reviewed and they shall require prior approval of RBI in the following cases – Takeover / Acquisition of control, which may / may not result in change of management. Sale / Transfer of payment activity to an entity not authorised for undertaking similar activity. 3. The non-bank PSOs shall inform RBI within 15 calendar days in the following cases – Change in management / directors. Sale / Transfer of payment activity to an entity authorised for undertaking similar activity. 4. Details of the requirements are given in Annex-1 . 5. This directive is issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007) and shall come into effect immediately. Yours faithfully, (P. Vasudevan) Chief General Manager Annex-1 CO.DPSS.POLC.No.S-590/02-14-006/2022-23 dated July 04, 2022 1. Non-bank PSO shall require prior approval of RBI in the following cases: a. Takeover / Acquisition of control 1 , which may or may not result in change of management The transferor non-bank PSO shall submit an application to Department of Payment and Settlement Systems (DPSS), Central Office (CO), RBI, along with the following documents – Information about the proposed directors as per Annex-2 ; and Complete details about the new shareholders, etc., as per Annex-3 . b. Sale / Transfer of payment activity to an entity not authorised for undertaking similar activity The seller / transferor non-bank PSO shall apply to DPSS, CO, RBI for obtaining prior approval along with the minimum appropriate details. The buyer / transferee entity shall apply for authorisation in Form A (available on RBI website) as prescribed under Regulation 3(2) of the Payment and Settlement Systems Regulations, 2008 along with the requisite application fee. This shall be akin to a new authorisation and the procedure specified in the guidelines for respective payment activity will be applicable (except that the last available System Audit Report would be sufficient in case a new system is not being set-up). If the acquiring entity is a bank, it shall apply to DPSS, CO, RBI for approval. After obtaining Certificate of Authorisation (CoA) / approval, the sale / transfer can be proceeded with. The seller / transferor PSO shall voluntarily surrender its CoA as per the process mentioned in RBI circular DPSS.CO.AD.No.2627/02.27.005/2015-16 dated May 12, 2016 . The buyer / transferee bank / non-bank shall be liable for complying with any regulatory / supervisory action taken by RBI for periods prior to the sale / transfer. 2. RBI shall endeavour to respond within 45 calendar days after receipt of complete details from both the entities. The timeline is not applicable in case of overseas principal in Money Transfer Service Scheme. 3. Requirement of prior public notice After obtaining RBI approval, a public notice of at least 15 calendar days shall be given before effecting the changes. Such public notice shall be given either separately by the authorised non-bank PSO and the buyer / acquirer bank / non-bank, or jointly by them. The public notice shall indicate the intention and reasons for such changes, particulars of the entities concerned, etc. The notice shall be published in at least one leading national and in one leading local vernacular newspaper (covering the place of the registered office of the respective entities). The seller / transferor non-bank PSO shall also inform all stakeholders (agents, bankers, customers, merchants, etc.) of the changes, at least 15 calendar days before effecting the same. 4. The authorised non-bank PSO shall inform DPSS, CO, RBI within 15 calendar days in the following cases – Change in management / directors with complete details, including ‘Declaration and Undertaking’ ( Annex-2 ) by each of the new directors. RBI shall examine the fit and proper status of the management / directors, and, if required, may place suitable restrictions. Sale / Transfer of payment activity to an entity authorised by RBI for undertaking similar activity. The entities shall issue prior public notice and the seller / transferor non-bank PSO shall also inform all stakeholders at least 15 calendar days before the actual sale / transfer as per the details given in para 3 above (except that prior approval of RBI is not required for the purpose). The instructions mentioned in para 1(b)(v) above, shall be applicable. 5. The above instructions are in addition to, and not in derogation of the provisions of any other laws, rules, regulations or directions, for the time being in force. Annex-2 Information to be submitted in case of change in directors A. Declaration and undertaking by the Director (with enclosures as appropriate as on ……………) (To be submitted by non-bank PSO to DPSS, CO, RBI, Mumbai) Name of applicant company / non-bank PSO: I
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2022-23/80 · issued 04 Jul 2022. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Non-bank Payment System Operators (PSOs), Banks acquiring or selling payment system activities, Lenders financing acquisitions of non-bank PSOs, Compliance teams at banks and NBFCs dealing with PSOs), your first concrete step on “RBI Tightens Rules on Takeover and Sale of Non-Bank PSOs” is: “Review any planned or ongoing acquisitions, takeovers, or transfers involving non-bank PSOs and halt them until RBI approval is obtained.” (RBI issued this 04 Jul 2022).

  1. Circular: RBI/2022-23/80 -- RBI Tightens Rules on Takeover and Sale of Non-Bank PSOs
  2. Issued: 04 Jul 2022
  3. Action required: Review any planned or ongoing acquisitions, takeovers, or transfers involving non-bank PSOs and halt them until RBI approval is obtained.
  4. Action required: Update internal compliance checklists to include prior RBI approval for changes in control or sale of payment activity to unauthorised entities.
  5. Action required: Ensure that any change in management or directors of a non-bank PSO is reported to RBI within 15 calendar days.
  6. Action required: If acquiring a non-bank PSO's payment activity, prepare to apply to RBI and accept liability for past regulatory actions of the seller.
  7. Action required: Publish a public notice for at least 15 days after RBI approval, before effecting any changes.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12348&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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