On June 13, 2020, India’s central bank, the Reserve Bank of India (RBI) has made some changes to the monitoring structure of Financial Markets Infrastructure (FMI) and Retail Payment Systems (RPSs) with the aim to ensure the security and stability of the payment structure.
Version 2.0 of financial market structure and retail payment system:
- According to the document, the Reserve Bank will monitor existing and planned systems, financial market infrastructure and retail payment systems through assessment. It will also change it if necessary for improvement.
- The new framework treats NPCI (National Payments Corporation of India ) and National Electronic Fund Transfer (NEFT) as FMIs as well means NPCI will now have to reveal self-assessment of compliance on an annual basis and distribute data of systems operated by it on a monthly, quarterly and hal-yearly basis with subject to increased regulatory audits and onsite inspections of RBI.
- It is to be noted that in general Systematically important FMIs till now only included Real Time Gross Settlement (RTGS), Securities Settlement Systems (SSSs), Clearing Corporation of India Ltd. (CCIL) and Negotiated Dealing System (NDS).In addition, NPCI has also been designated as a “system wide important payment system (SWIPS).
- Further, the new framework also includes Retail payment systemVisa and Mastercard under increased regulatory supervision of RBI.
Retail payment system refers to transactions through mobile phones, Internet, ATMs, POS networks, contactless technology (card payments etc.), electronic billing and various systems and platforms used for instant payments.
Benefits of the new framework: This document will increase transparency in surveillance and disclosures and improve regulatory compliance by payment system operators & will also increase customer awareness, which will result in better security, stability and betterment of our payment system.
About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).