According to the annual report for 2022-2023, RBI is exploring a light weight and portable Payment and Settlement System (LPSS), which will be independent of conventional technologies and can be operated from anywhere by a bare minimum staff.
LPSS: Key points
- Such a lightweight 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 intac .
- The system would facilitate uninterrupted functioning of essential payment services like bulk payments, interbank payments and provision of cash to participant institutions, during extreme and volatile situations or catastrophic events.
- It will operate on minimalistic hardware and software, be made active only on a need basis, and process transactions critical to ensure economic stability.
- 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.
- Existing conventional payment systems like RTGS, NEFT and UPI are designed to handle large volumes while ensuring sustained availability and hence are dependent on complex wired networks backed by advanced IT infrastructure, which could be rendered unavailable due to disruptions in the underlying information and communication infrastructure.
- As a part of the ‘Utkarsh 2.0’ initiative, RBI will put in place a resilient framework for oversight of Centralised Payment Systems — NEFT and RTGS.
- It will also look to upgrade the RTGS system, including improvements in existing and introduction of new functionalities.
- The central bank will also review the continuation of the Payments Infrastructure Development Fund (PIDF) Scheme given that it has met its initial targets well ahead of schedule.
