RBI Extends Time Limit for Authorisation under Umbrella Entity of Retail Payments
Recently the Reserve Bank of India (RBI), by way of Press Release No 2020 – 2021/ 1161, issued on 26.02.2021, has directed an extension in the Time Limit for Authorisation under Umbrella Entity of Retail Payments. The said framework was released by the apex bank on 18.08.2020.
In this learning blog, we will discuss in depth the concept of Authorisation under Umbrella Entity of Retail Payments, together with the new extended time period and the need for the same.
Concept of Authorisation under Umbrella Entity of Retail Payments
According to the framework, all the companies which are having a net worth of over Rs. 500 crore will be qualified to set up an umbrella entity and will be allowed to set up, manage, and operate new payment mechanisms in the retail space inclusive of ATMs (Automated Teller Machines), white label POS, Aadhar based payments, and remittance services.
Further, the umbrella entity will be allowed to operate clearing and settlement mechanisms for both banks and non-banks. Also, these entities will be permitted to identify and manage pertinent risks, such as settlement, liquidity, credit, and operational, and will be responsible forpreserving the integrity of the system.
Moreover, it will be expected to monitor and supervise retail payment system developments and concerned issues, both in the country and internationally, to dodge shocks, frauds, and contagions, which may adversely affect the system and the economy in general.
Reasons for Extension of Time Limit for Authorisation
RBI has received requests from various stakeholders, including IBA (Indian Banks’ Association), for extending the timeline. The same was asked,keeping in view the COVID-19 related insolvencies and disruptions.
New Extended Time Limit
After taking into consideration the request made by the stakeholders, RBI has been accordingly decided to further extend the timeline for filing the application for the authorisation under Umbrella Entity of Retail Payments up to 31.03.2021.
In a nutshell, RBI has extended the last date for filing the application for the authorisation under Umbrella Entity of Retail Payments after taking into consideration the requests made by the stakeholders. The extended date for the same is 31.03.2021.