Master Directions on Access Criteria for Payment Systems

RBI/DPSS/2016-17/51 Master Direction DPSS.CO.OD.No.1846/04.04.009/2016-17 January 17, 2017 ( Updated as on July 28, 2021 )

The Chairman/ Managing Director/ Chief Executive Officer All Scheduled Commercial Banks including RRBs/ Urban Co-operative Banks/ State Co-operative Banks/ District Central Co-operative Banks/ Payment Banks/ Small Finance Banks/ Primary Dealers/ Authorised Payment System Providers

Dear Sir,

Master Directions on Access Criteria for Payment Systems

A reference is invited to our circular DPSS.CO.OD.494/04.04.009/2011-2012 dated September 21, 2011 prescribing the Access Criteria for Payment Systems. These Master Directions, being issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007 (Act 51 of 2007), consolidate and update all the instructions issued on the subject up to December 31, 2016 and placed on the web-site of the Reserve Bank of India (www.rbi.org.in).

Yours faithfully

(Nanda S. Dave) Chief General Manager

Contents

• INTRODUCTION
• SECTION I
  • 1.1 Short Title and Commencement
  • 1.2 Applicability
  • 1.3 Purpose
• SECTION II
  • 2.1 General Guidelines
  • 2.2 Access Criteria
• SECTION III
  • 3.1 Guidelines for Membership to Centralised Payment Systems
  • 3.2 Guidelines for Membership to Decentralised Payment Systems
• SECTION IV
  • 4.1 Sub-membership Facility
  • 4.2 Sub-membership of Centralised Payment Systems
  • 4.3 Sub-membership of Decentralised Payment Systems
• SECTION V
  • 5. Review of Membership
• Appendix 1 - Covering letter & Application forms (Centralised Payment Systems)
  • Covering Letter for Membership to Centralised Payment Systems
  • Annex I – Application form for Current Account
  • Annex II – Application form for SGL and IDL-SGL Account
  • Annex III – Application form for NDS-OM and NDS-CALL membership
  • Annex IV – Application form for INFINET membership
  • Annex V – Application form for RTGS membership
  • Annex VI – Application form for NEFT membership
• Appendix 2 - Covering letter & Application form (Decentralised Payment Systems)
  • Covering Letter for Membership to Decentralised Payment Systems
  • Annex I – Application form for Current Account
• ANNEX A
  • List of Circulars repealed, as the contents of the same have been incorporated in the Master Direction

INTRODUCTION

In exercise of the powers conferred by Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007 (Act 51 of 2007), the Reserve Bank of India being satisfied that for the purpose of enabling it to regulate the payment systems or in the management or operation of the payment systems and it is necessary and expedient in the public interest so to do, hereby, issues the directions hereinafter specified.

SECTION I

1.1 Short title and commencement

• 1.1.1 These directions shall be called the Reserve Bank of India (Access Criteria for Payment Systems) directions 2017.
• 1.1.2 These directions shall come into effect on the day they are placed on the official website of the Reserve Bank of India (RBI).

1.2 Applicability

The provisions of these directions shall apply to all scheduled/ licensed banks operating in India and authorised payment system providers (PSPs) who are desirous of participation in payment systems in India.

1.3. Purpose

These directions are issued with a view to providing a framework for scheduled/ licensed banks/ primary dealers /authorised PSPs enabling them to apply for membership of payment systems. These directions also aim to provide a set of consolidated requirements for the applicant for various requirements related to payment systems. To ensure the safety, security and integrity of payment services, such access is subject to certain minimum standards.

SECTION II

2.1 General Guidelines

• 2.1.1 There will be two sets of access criteria viz., one for centralised payment systems and the other for decentralised payment systems. The centralised payment systems will include Real Time Gross Settlement (RTGS) System and National Electronic Fund Transfer (NEFT) system and any other system as may be decided by RBI from time to time. 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.
• 2.1.2 Membership to the centralised and decentralised payment systems will be open to all scheduled / licensed banks. They will be eligible for Type A membership in RTGS with customer, inter-bank, Own Account Transfer (OAT) and Intra-Day Liquidity (IDL) transactions and NEFT. Unlicensed banks can continue to participate in the decentralised payment systems as sub-members. Co-operative societies cannot be either direct members or sub-members in any payment system.
• 2.1.3 Notified institutions like Post Office Savings Bank will as hitherto be eligible for membership in decentralised payment systems.
• 2.1.4 Primary Dealers will be eligible for Type B RTGS membership covering inter-bank, OAT and IDL transactions, subject to the extant regulations and recommendations of the regulatory department concerned. Among the authorised non-bank PSPs, while Prepaid Payment Instrument (PPI) Issuers and White Label ATM Operators will be eligible for Type-D membership in RTGS, covering customer / inter-bank transactions, Card Networks will be eligible for Type-C membership in RTGS enabling Multilateral Net Settlement Batch (MNSB) transactions and OAT. PPI issuers will be eligible for membership to NEFT also. Inter-bank transactions include transactions with non-banks also. For clearing organisations / other PSPs and other entities, the RBI would consider membership requests on a case-to-case basis.
• 2.1.5 Access criteria for membership to the various payment systems will be reviewed once in two years.

2.2 Access Criteria

• 2.2.1 The uniform access criteria at the time of application for centralised payment systems is given below:

  • A. Banks

    • Minimum CRAR of 9% (as per the latest audited balance sheet);
    • Net NPAs below 5% (as per the latest audited balance sheet);
    • Minimum net-worth of ₹25 crore;
    • Availability of Core Banking Solution / centralised processing system at applicant’s end;
    • Adequate technical competence and system readiness including cyber resilience;
    • Compliance to instructions on storage of payment system data; and
    • Recommendation of the concerned regulatory / supervisory department.

  • B. Authorised non-bank PSPs:

    • Authorisation from the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (PSS Act) to set up and operate payment system;
    • Minimum net-worth prescribed by RBI as per certificate of authorisation or ₹25 crore, whichever is higher;
    • Incorporation in India under the Companies Act, 1956 / 2013. Entities not fulfilling this requirement shall empower their Indian subsidiary / associate to enter into valid agreements with RBI;
    • Implementation of centralised processing systems;
    • Adequate technical competence and system readiness including cyber resilience;
    • Compliance to instructions on storage of payment system data; and
    • Recommendation of the concerned regulatory / supervisory department.

• 2.2.2 The uniform access criteria at the time of application for decentralised payment systems is given below:

  • Minimum CRAR of 9% (as per the latest audited balance sheet);
  • Net NPAs below 5% (as per the latest audited balance sheet);
  • Availability of Core Banking Solution / centralised processing system at applicant’s end; and
  • Recommendation of the concerned regulatory / supervisory department.

• 2.2.3 The recommendations of the regulatory / supervisory department of the RBI will be obtained independently, and need not be furnished by the applicant entity at the time of submission of the application.

• 2.2.4 Continuation of banks / primary dealers / authorised non-bank PSPs in payment systems may be allowed on the recommendation of the concerned regulatory / supervisory department in case of any deterioration in the financials of the bank / primary dealer / authorised non-bank PSPs below the thresholds indicated in para 2.2.1 and 2.2.2 above.

• 2.2.5 For new banks licensed, no separate recommendation of the regulatory / supervisory department would be obtained, if the bank has submitted its application for centralised / decentralised payment system before starting to provide services as banks.