RBI relaxes timeline for Payment Systems compliances

The Reserve Bank of India, through its circular dated 21st May, 2021, has relaxed timeline for a number of payment systems compliances. The circular affects the following compliances.

Pre-Paid Payment Instruments

Firstly, the RBI had earlier mandated all existing non-bank issuers to comply with minimum positive net worth of Rs. 15 Crore. Previously, the date of compliance was 31st March, 2021. It has now been extended to 30th September, 2021.

The RBI had originally notified the Master Directions on Issuance and Operation of Prepaid Payment Instruments in March, 2017.

Their main purpose was of the master directions was:

  • To provide a framework for authorisation, regulation and supervision of entities operating payment systems for issuance of PPIs in the country;
  • To foster competition and encourage innovation in this segment in a prudent manner while taking into account safety and security of transactions as well as systems along with customer protection and convenience.
  • To provide for harmonisation and interoperability of PPIs.

Banks and non-bank entities have been issuing PPIs in the country after obtaining necessary approval / authorisation from RBI under the Payment and Settlement Systems Act, 2007 (PSS Act). These entities were operating within the framework of the initial guidelines on “Issuance and Operation of PPIs” issued in April 2009 which were amended from time to time keeping in mind the dynamics of the field and the progress made by PPI issuers.

Harmonisation of Turn Around Time (TAT)

Harmonization of Turn Around Time (TAT) and customer compensation for failed transactions using authorized payment systems shall be complied with. The revised deadline of compliance is 30th September, 2021. Earlier it was 1st January, 2021.

RBI in its Statement on Development and Regulatory Policies, issued on 4th April, 2019, had proposed that it would put in place a framework on Turn Around Time (TAT) for resolution of customer complaints and compensation framework across all authorized payment systems.

According to the statement, “It has been observed that a large number of customer complaints emanate on account of unsuccessful or ‘failed’ transactions. Failure could be on account of various factors not directly attributable to the customer such as disruption of communication links, non-availability of cash in ATMs, time-out of sessions, non-credit to beneficiary’s account due to various causes, etc. Rectification / Compensation paid to the customer for these ‘failed’ transactions is not uniform.”

On 20th September, 2019, the RBI after consultation with various stakeholders finalized the framework for TAT for failed transaction and compensation.

Security Audit Report by CERT-In empaneled auditors

Authorised Payment System Operators (PSOs) are required to furnish System Audit Report conducted by:

  • CERT-IN empanelled auditors; or
  • Certified Information Systems Auditor (CISA) registered with Information Systems Audit and Control Association; or
  • holder of a Diploma in Information System Audit qualification of the Institute of Chartered Accountants of India,

on an annual basis within two months of close of their respective financial year. Revised deadline of compliance is 30th September, 2021.

Payment Aggregation authorization

Earlier, as per the notification dated 4th June, 2021, existing Non-bank entities offering Payment Aggression services had to apply for authorisation on or before 30th June, 2021. Now the revised deadline is 30th September, 2021.

The RBI had clarified that banking entities which were engaged in providing payment aggregation services would not be required to obtain a separate license from the RBI under the Aggregation Guidelines. However, non-bank entities are required to obtain a specific registration from the RBI for undertaking payment aggregation activities. Existing non-bank entities engaged in providing payment aggregation services were provided a 15-month window up till 30 June 2021 to prepare and submit their applications for obtaining authorization. Now it has been revised to 30th September, 2021.

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Pukhraj Biala

I am an undergraduate student at Symbiosis Law school, NOIDA, pursuing B.A.LL.B. I am a problem solver who believes in reaching to a conclusion by weighing all the options and identifying the best possible one. I find Technology Laws quite fascinating and I continue to follow and learn the subject.

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