Payment & Settlement Systems in India

Abstract

Traditionally the payment system in India has been bank driven. However, with new fintech and regulations, electronic payments system are in place and evolving. Beginning with closed systems like pre-loaded cards, to semi closed systems like e-wallets from Paytm, Mobiliwik andTez, to Payments Banks, and modes of payment such as NEFT, RTGS and IMPS, electronic payment systems are rapidly getting adopted in India. This note attempts to (a) enumerate the different modes of electronic payments in India and their relative scale as compared to cash, (b) examine the salient points of regulations such as the Payment and Settlement Systems Act, 2OO7 and its proposed successor of 2018 and the implications thereof for different firms and for the regulatory landscape - including the future role of India's central bank, the Reserve Bank of India in payments and (c) the role of "payments banks" under a separate Payments Regulatory Board and the role of Reserve Bank of India, the central bank.