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The Reserve Bank will examine the case for increased participation of non-banks in Centralised Payment System (CPS), according to its latest Financial Stability Report (FSR). Providing direct access to non-banks can quicken their access to funds by pruning one layer and also reduce costs, the report said.

The RBI operates CPS such as the Real-Time Gross Settlement (RTGS) system and the National Electronic Funds Transfer (NEFT) system. Currently, non-bank participants who have been permitted access to CPS are standalone primary dealers, clearing corporations, central counterparties, retail payment system organisations, select financial institutions (the National Bank for Agriculture and Rural Development Nabard, Export-Import Bank of India) and Deposit Insurance and Credit Guarantee Corporation.

By virtue of the numerous payment systems that it operates, National Payments Corporation of India (NPCI) has emerged as a systemically important payment system entity, the FSR said. This is specifically the case for instant retail payment systems such as the Immediate Payment Service (IMPS) and Unified Payments Interface (UPI), both of which are operated by the NPCI.

The report underscored that the availability of New Umbrella Entity (NUE) offering products, which will lead to the redundancy of existing systems can, besides addressing concentration risk, also encourage competition and innovation, thus contributing to financial stability.

By offering alternative digital retail payment systems to the consumers, the NUE would help in enhancing the reach of digital payments to a larger number of people and, thereby, reduce the dependency on cash, it added.

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