Skip to main content

Directions on Authorisation to Operate a Payment System

Reserve Bank of India (RBI) has issued directions on authorisation to operate a payment system.

To whom shall the directions be applicable?

The directions shall apply to –

  • An entity applying for authorisation to operate a payment system under the Payment and Settlement Systems Act, 2007 (PSS Act).
  • An entity authorised to operate a payment system under the PSS Act.

What are the requirements for operating a payment system?

  • No person can operate a payment system without an authorisation issued by the RBI.
  • Authorisation shall be available on an on-tap basis.
  • The capital requirement shall be in accordance with the guidelines / directions issued for the specific payment system. 

What are the directions on investments from FATF non-compliant jurisdictions?

  • The Financial Action Task Force (FATF) periodically identifies jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT) in its following publications – (i) High-Risk Jurisdictions subject to a Call for Action, and (ii) Jurisdictions under Increased Monitoring. 
  • A jurisdiction whose name appear in these lists is referred to as a FATF non-compliant jurisdiction. 
  • New investors from or through FATF non-compliant jurisdictions, whether in existing Payment System Operators (PSOs) or in entities seeking authorisation as PSOs, are not permitted to acquire, directly or indirectly, ‘significant influence’ in the investee PSO, i.e., in aggregate, the investor should hold less than 20% of the voting power (including potential voting power) of the PSO.

What will be the validity period of the Certificate of Authorisation (CoA)?

  • A new entity will be granted authorisation to operate a payment system on a perpetual basis. 
  • For an existing authorised PSO, perpetual validity may be provided when the CoA becomes due for renewal, subject to its adherence to the following –
    • Full compliance with the terms and conditions subject to which authorisation was granted.
    • No major regulatory or supervisory concerns related to the operations of the PSO.
    • No adverse reports from other departments of RBI / regulators / statutory bodies, etc.
  • Existing PSOs who do not satisfy the conditions will be given 1-year renewals to enable them to comply. 

What are the directions on cooling period?

  • RBI may impose a cooling period of 1 year in the following situations –
    • Authorised PSOs whose CoA is revoked or not renewed for any reason.
    • The CoA is voluntarily surrendered for any reason.
    • Application for authorisation of a payment system has been refused by the RBI.
    • New entities that are set up by promoters involved in any of the above categories.
  • During the cooling period, the entities shall not be allowed to submit an application to operate any payment system under the PSS Act.


References

Reserve Bank of India. (2026, June 15). 'Master Directions on Authorisation to operate a Payment System'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13502&Mode=0

Reserve Bank of India. (2026, June 15). 'RBI Issues Master Directions on Authorisation to operate a Payment System'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=62941


Follow at - Telegram   Instagram   LinkedIn   X   Facebook

Labels:

Comments

Post a Comment

Popular Posts

Regulatory Measures for the Foreign Exchange Market

Reserve Bank of India (RBI) has announced regulatory measures for the foreign exchange market. Cancellation and rebooking / rollovers of foreign exchange derivative contracts An Authorised Dealer shall not permit users to rebook any foreign exchange derivative contract involving the INR, whether deliverable or non-deliverable, which has been cancelled with any of the Authorised Dealers. An Authorised Dealer may, however, continue to permit users to rollover foreign exchange derivative contracts on maturity, subject to compliance with the extant directions. Threshold limit for taking positions without requirement to establish the existence of underlying Authorised Dealers were permitted to allow users to take positions upto USD 100 million equivalent of notional value (outstanding at any point of time), across all Authorised Dealers, for hedging contracted exposure without the requirement to establish the existence of underlying exposure.  Further, a user was allowed to take positio...
Post a Comment
Read more

Highlights of RBI Annual Report 2025-26 – Chapter 1 to 3

Reserve Bank of India (RBI) has published its annual report for the financial year 2025-26. In a series of articles, we will go through the highlights of the report. This is the first article in the series.  Legal framework for publication of Annual Report by the RBI Report of the Central Board of Directors on the working of RBI for the year is submitted to the Central Government in terms of Section 53(2) of the RBI Act, 1934. The letter of transmittal is signed by the RBI Governor and addressed to the Finance Secretary, Ministry of Finance, Government of India. Documents submitted by the RBI to the Central Government In pursuance of Section 53(2) of the RBI Act, 1934, the following documents have been submitted to the Central Government – A copy of the Annual Accounts for the year ended March 31, 2026 certified by the RBI’s Auditors and signed by Chief General Manager-in-charge, all the Deputy Governors and Governor. 2 copies of the Annual Report of the Central Board on the workin...
Post a Comment
Read more

Credit Facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs)

Reserve Bank of India (RBI) has issued guidelines on credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs). What are the guidelines on credit facilities to SCs & STs? District Level Consultative Committees formed under the Lead Bank Scheme should continue to be the principal mechanism of co-ordination between banks and development agencies.  National Scheduled Tribes Finance & Development Corporation and National Scheduled Castes Finance & Development Corporation have been set up under the administrative control of Ministry of Tribal Affairs and Ministry of Social Justice & Empowerment, respectively. Banks should advise their branches / controlling offices to render all the necessary institutional support to enable these institutions to achieve the desired objectives. Loans sanctioned to State Sponsored Organisations for Scheduled Castes / Scheduled Tribes for the specific purpose of purchase and supply of inputs and / or the marketing of the out...
Post a Comment
Read more

Reserve Bank of India Act, 1934 – Part-IV – Section 42 to 45 (updated as on April 15, 2025)

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the fourth article in the series.  Section 42 – Cash reserves of scheduled banks to be kept with the Bank (updated as on April 15, 2025) 42(1) – Every bank included in the Second Schedule shall maintain with RBI an average daily balance at a percent (notified by RBI) of its total demand and time liabilities in India. For the purpose, fortnight means the period from the first day to the 15th day of each calendar month or 16th to the last day of each calendar month, both days inclusive. 42(1A) – RBI may direct every scheduled bank to maintain with RBI, in addition to the balance prescribed under Section 42(1), an additional average daily balance at a rate (specified by RBI). 42(1C) – RBI may specify any transaction or class of transactions to be regarded as liability in...
Post a Comment
Read more

Reserve Bank - Integrated Ombudsman Scheme, 2026 (RB-IOS, 2026)

Reserve Bank of India (RBI) has issued Reserve Bank - Integrated Ombudsman Scheme, 2026. Who is RBI Ombudsman and RBI Deputy Ombudsman? RBI may appoint one or more of its officers as RBI Ombudsman and RBI Deputy Ombudsman, to carry out the functions entrusted to them under the Reserve Bank - Integrated Ombudsman Scheme (RB-IOS).  The appointment of RBI Ombudsman or RBI Deputy Ombudsman shall be for up to 3 years at a time. RBI Ombudsman shall have the power to examine and close all complaints.   RBI Deputy Ombudsman shall have the power to close those complaints falling under clause 10 of the RB-IOS (i.e. non-maintainable complaints) and complaints resolved as per the provisions of the clause 14(8)(a) to 14(8)(c) of the RB-IOS (i.e. complaint resolved / withdrawn). Which entities are covered under the RB-IOS? RB-IOS shall be applicable to the following Regulated Entities (REs) – Commercial Banks Regional Rural Banks  State Co-operative Banks Central Co-operative Bank...
Post a Comment
Read more