Small finance banks can join payment system: RBI

Small finance banks can join payment system: RBI

Entities that received in-principle approval for setting up payments banks and small finance banks can join any payment system only after getting the final licence, the Reserve Bank of India (RBI) said on Tuesday.

“... entities that have been granted in-principle approval by it for setting up payments banks and SFBs can apply to the RBI for membership of any centralised/ decentralised payment systems, including Bharat Bill Payment System, after receiving the licence for commencement of business under the Banking Regulation Act, 1949,” according to a statement from the central bank.

RBI had been receiving queries from such entities regarding the approval process for joining any centralised/ decentralised payment systems, it said.

The central bank, in August and September, announced the names of 21 entities that were granted in-principle approval for setting up payments banks and SFBs.

The ‘in-principle’ approval is valid for 18 months during which time the applicants have to comply with all requirements stipulated by the RBI before grant of final licence for commencement of banking business.

In a separate statement, RBI said to encourage innovators in the area of Payment and Settlement System, the central bank has announced ‘Payment System Innovation Awards’ Broad areas of innovation which could be considered for the awards are payment security including fraud prevention, customer convenience and cost reduction and use of emerging technologies for payments, it said.

Source:BankingUpdates