Reserve Bank of India is making such a portable payment system which will remain active even in disastrous conditions
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Catastrophic events like natural disasters and war often render existing payment systems like RGS, NET and UPI temporarily inaccessible. To get rid of such problems, RBI is going to bring this new system.
The country’s central bank Reserve Bank of India is working on a new penmate system. A system that can prove to be a millstone in the economic world. Reserve Bank is working on light weight and portable payment system. This payment system is far ahead of the existing payment methods in terms of convenience and safety. The proposed Light Weight and Portable Payment System (LPSS) is unique in many respects. According to the central bank, this system is different from traditional techniques and can be operated from anywhere by minimum staff.
While the existing traditional payment systems RTGS (Real Time Gross Settlement), NEFT (National Electronic Funds Transfer) and UPI (Unified Payments Interface) are designed for frequent large volume payments, LPSS advances rely on complex wired networks. Significantly, in catastrophic events like natural calamities and war, existing payment systems like RGS, NET and UPI are often temporarily out of reach. To get rid of such problems, RBI is going to bring this new system. According to the central bank, this system will be used only when needed.
“It is expected to work on minimal hardware and software and will be activated only on need basis. It will process transactions that are important for ensuring the stability of the economy such as government and market related transactions,” RBI said. ” The central bank said that such a system can ensure almost zero downtime of the payment and settlement system in the country. It will also help keep the liquidity pipeline of the economy alive and intact by facilitating seamless functioning of essential payment services such as wholesale payments, interbank payments and provision of cash to participating institutions.
“Having such a flexible system in place is likely to act as a bunker equivalent in payment systems and will also enhance public confidence in digital payments and financial market infrastructure,” RBI said. During 2022-23, the payment and settlement systems registered a robust growth of 57.8 per cent in terms of transaction volume on top of the expansion of 63.8 per cent recorded in the previous year. The share of digital transactions in the total volume of non-cash retail payments to increase to 99.6 per cent during 2022-23 from 99.3 per cent in the previous year.
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