Reserve Bank of India (RBI) issues revised authorisation framework for payment systems

Key facts

• The Reserve Bank of India (RBI) issued revised Master Directions on Authorisation to Operate a Payment System under the Payment and Settlement Systems Act, 2007, applicable to new applicants and existing Payment System Operators (PSOs).
• The framework formalises on-tap licensing, which allows entities to apply for authorisation at any time.
• The RBI introduced perpetual validity of Certificates of Authorisation (CoA) for PSOs, while non-compliant operators will receive one-year renewals until compliance is achieved.
• Aggregate voting power for investments from Financial Action Task Force (FATF) non-compliant jurisdictions is capped at below 20 per cent.
• A mandatory one-year cooling period is introduced for entities whose authorisation is revoked, not renewed, voluntarily surrendered, or rejected, with unsettled claims remaining valid for up to three years.