RBI plans a light weight and portable payment system, independent of conventional techs
May 30, 2023
Mumbai (Maharashtra) [India], May 30 : The Reserve Bank of India (RBI) on Tuesday said it conceptualised a lightweight and portable payment system that will be independent of conventional technologies and can be operated from anywhere by a bare minimum staff in order to be prepared to face such extreme and volatile situations such as natural calamities and war.
According to the Reserve Bank of India's annual report of 2022-23, the payment system is expected to operate on minimalistic hardware and software and would be made active only on a need basis.
It added it would process transactions that are critical to ensure stability of the economy such as government and market related transactions.
According to the report, the central bank also added, "Such a light weight and portable payment system could ensure near-zero downtime of payment and settlement system in the country and keep the liquidity pipeline of the economy alive and intact by facilitating uninterrupted functioning of essential payment services like bulk payments, interbank payments and provision of cash to participant institutions."
It also said having such a resilient system is also likely to act as a bunker equivalent in payment systems and thereby enhance public confidence in digital payments and financial market infrastructure even during extreme conditions.
The existing conventional payment systems like the real-time gross settlement (RTGS), National Electronic Fund Transfer (NEFT) and Unified Payments Interface (UPI) are designed to handle large volumes while ensuring sustained availability and hence they are dependent on complex wired networks backed by the advanced IT infrastructure, the report from RBI said. "However, catastrophic events like natural calamities and war have the potential to render these payment systems temporarily unavailable by disrupting the underlying information and communication infrastructure," it added. Therefore, the central bank said in the report that it was prudent to be prepared to face such extreme and volatile situations.
