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RBI opens up RTGS, NEFT to non-banks in phases

  • Posted By
    10Pointer
  • Categories
    Economy
  • Published
    30th Jul, 2021

Context

The Reserve Bank of India (RBI) allowed authorized non-bank payment system providers (PSPs) to participate in centralized payment systems (CPS), such as real-time gross settlement (RTGS) and national electronic fund transfer (NEFT), as direct members.

What is PSPs?

  • PSPs include prepaid payment instrument (PPI) issuers, card networks, white label ATM (WLA) operators and trade receivables discounting system (TReDS) platforms.

What is centralized payment system (CPS)?

  • It means that a central authority is in control of the data and functions of the said platform.
  • Component:Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) system.
    • Both owned and operated by the Reserve Bank.

Decentralized Payment Network

  • A decentralized payment network refers to a system where users, customers and vendors can exchange money without having to trust any third party to keep the network secure and operational.

Centralized

Decentralized

Third-Party Involvement

Yes

No

Control

Full control stays with the central authority

Control stays with the user itself

Hackable

More prone to hacks and data leaks

Less prone to hacks and data leaks as no single point of failure

Single Point of failure

Yes

No

Ease of use

Intuitive and easy to use

Not easy to use

Exchange fees

Higher fees

Less fees

Anonymous

Users are not anonymous

Offers anonymity