The Reserve Bank of India is looking to mandate domestic processing of payment transactions. Presently guidelines are in place for domestic storage of payment data, but banks and nonbanks are allowed to process payment transactions abroad subject to certain conditions.

“Keeping in view the emerging geo-political risks, options are being explored to ring-fence domestic payment systems,” RBI said in its Payment Vision 2025 document.  

Under current regulations, there is no bar on processing payment transactions outside India. However, the data shall be stored only in India after processing. The complete end-to-end transaction details should be part of the data.

If the processing is done abroad, the data should be deleted from the systems abroad and brought back to India not later than one business day or 24 hours from payment processing, whichever is earlier. The same should be stored only in India. Experts said if RBI mandates domestic processing of transactions, many multinational payment entities may find it tough to comply. “Many payment companies had initially failed to comply with the data localisation norms so if they have to start processing transactions also in India then they may have to make more investments here which can turn operations costly,” said an industry expert.

This comes even as the RBI has been exploring ways to expand the footprint of India’s payment systems by collaborating with the World Bank and other global financial institutions. For example, the RTGS system presently settles domestic fund transfer transactions on a gross basis. RBI now wants the system, which runs on ISO 20022 standard to suit domestic requirements, be streamlined with the internationally accepted standard for cross-border fund transfers. “The feasibility of expanding RTGS to settle transactions in major trade currencies such as USD, Pound, Euro, etc., shall be explored through bi-lateral or multilateral arrangements. The arrangements could be expected to provide real-time proceeds in foreign currencies to traders and establish the country as a major centre for international financial trades,” the RBI said

Rajesh Mirjankar, MD & CEO,, a digital solutions provider, said, “The Payments Vision 2025 is progressive and has an outlook to establish India as a powerhouse of payments globally. One of the most important forward-looking initiatives is the global outreach of UPI RTGS NEFT and Rupay cards with internationalization, where bilateral treaties with nations especially covering the USD, GBP and Euro will hugely benefit Indian residents and their counterparties overseas with online realization at lesser costs.”