Recently, the Reserve Bank of India (RBI) allowed non-bank Payment System Providers (PSPs) to participate in Centralised Payment Systems (CPS – RTGS and NEFT), as direct members.

Important points:

  • In the first phase, PSPs such as Prepaid Payment Instruments (PPIs), card networks and White Label ATM (WLA) operators will be allowed access.
  • ATMs set up, owned and operated by non-banks are called WLAs.
  • Presently, only banks and select non-banks such as NABARD (National Bank for Agriculture and Rural Development) and Exim Bank (Export-Import Bank of India) are allowed access to CPS owned by RBI – NEFT and RTGS.

Separate IFSC to Non-Banks:

  • It means allotment of a separate Indian Financial System Code (IFSC) to non-banks, opening a current account with the RBI in its core banking system (e-Kuber) and maintaining a settlement account with the RBI.
  • IFSC represents the 11 digit character code that helps identify the individual bank branches that participate in the various online money transfer options like NEFT and RTGS.
  • Core Banking System is a solution that enables banks to offer a multitude of customer-centric services on a 24×7 basis.
  • It will also mean membership of Indian Financial Network (INFINET) and use of Structured Financial Messaging System (SFMS) to communicate with CPS.
  • INFINET is a membership-only Closed User Group (CUG) Network that comprises the RBI, Member Banks and Financial Institutions.
  • SFMS is India’s backbone for inter-bank financial messaging & CPS.


  • Direct access for non-banks to CPS lowers the overall risk in the payments ecosystem.
  • It also brings advantages to non-banks like reduction in cost of payments, minimising dependence on banks, reducing the time taken for completing payments.
  • Risk of failure or delay in execution of fund transfers can also be avoided when the transactions are directly initiated and processed by the non-bank entities.
  • Non-bank entities shall transfer funds from their Current Account to RTGS Settlement Account and vice versa during the operating hours.
  • It will increase efficiency, innovations, improve standards of data security as well as better risk management.

Centralised & Decentralised Payment Systems

  • CPS in India are Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems, both owned and operated by the Reserve Bank.
  • RTGS- It enables real-time transfer of funds to a beneficiary’s account and is primarily meant for large-value transactions.
  • Real time means the processing of instructions at the time they are received and gross settlement implies that settlement of funds transfer instructions occurs individually.
  • NEFT-It is an electronic fund transfer system in which the transactions received up to a particular time are processed in batches.
  • It is generally used for fund transfers of up to Rs. 2 lakh.
  • The decentralised payment systems will include clearing houses managed by RBI (Cheque Truncation System (CTS) centres) as well as other banks (Express Cheque Clearing System (ECCS) centres) and any other system as decided by RBI from time to time.


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