The Reserve Bank of India on Wednesday said that National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) facilities will be extended to non-bank payment system operators.

As of now, only banks were allowed to use RTGS and NEFT payment facilities. With RBI’s announcement, these money transfer systems will be extended to Prepaid Payment Instrument (PPI) issuers, card networks, white-label ATM operators and Trade Receivables Discounting System (TReDS) platforms.

“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,” said RBI Governor Shaktikanta Das.

WHAT DOES THIS MEAN?

In another statement, the central bank said that the aim is to encourage the participation of non-banks across payment systems.

“To reinforce this trend and encourage the participation of non-banks across payment systems, it is proposed to enable, in a phased manner, payment system operators, regulated by the Reserve Bank, to take direct membership in CPSs,” RBI said.

“This facility is expected to minimise 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,” it added.

Experts believe that the RBI’s proposal to extend NEFT and RTGS payment services will be a big boost to digital payment platforms.

It is worth mentioning that the central bank has also increased the maximum end of day balance per customer from Rs 1 lakh to Rs 2 lakh.

Meanwhile, the RBI on Wednesday decided to leave key interest rates unchanged and maintained an accommodative stance in the wake of a surge in Covid-19 cases in the country. The repo rate has been kept unchanged at 4 per cent and reverse repo rate at 3.35 per cent.

The real GDP growth projection of 10.5 per cent has also been retained for FY22.