MUMBAI – 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.

“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,” the central bank said in its annual report for 2022-2023.

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,” the report said.

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.

Strengthening framework

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.

”Implementation of the scheme resulted in various innovative ideas and field level experiences which the advisory council members felt necessary to explore. The feasibility of continuing the scheme on these lines will be explored,” RBI said.

Global standards

RBI said it is at an advanced stage of procurement and upgradation of SOC (Security Operation Centre) technologies, and making NEFT compliant with Global Messaging Standards.  

“Adoption of ISO 20022 will provide structured and granular data, improved analytics, end-to-end automation, and better global harmonisation. It will also pave the way for interoperability between RTGS and NEFT,” it said, adding that the RBI’s retail payment system will also be compliant with these standards.

The central bank is in the process of putting in place the required infrastructure for collection of details of payment touch points under the initiative of geo-tagging payment acceptance infrastructure. It is also looking to roll out the UPI facility for foreign nationals at all entry points in the country, inter-linking of UPI with Fast Payment Systems (FPS) of other countries to enable both foreign inward and outward remittances, and issuance of RuPay cards in other countries.

The agenda for 2023-24 includes upgrading the e-Kuber platform, which has been designated as a Critical Information Infrastructure (CII), to offer functionalities such as comprehensive real time dashboards, enhanced user experience, scalability, resilience, easier process orchestration, ease of integration with external and internal systems, front-end improvements for enhancing productivity, robust controls, and an integrated security architecture platform.

Nextgen data centre

In addition, the central bank has initiated the project to construct a new next generation data centre to address the capacity expansion constraints, meet ever-increasing IT landscape needs and avoid region-specific risks.

“The construction of the data centre has commenced and shall be in an advanced stage of completion in 2023-24,” the report said.

Other priority items include implementation of ‘Payee Name Lookup’ in Centralised Payment Systems, exploring enabling of real-time payee name validation before fund transfers, continued initiatives to enhance dissemination of granular data on payment systems, and enhancing of RBI’s internal applications to reduce dependence on manual and paper-based procedures.

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