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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


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