RBI proposes to tighten regulations for payment aggregators; issues draft rules

The Reserve Bank of India has issued draft rules to regulate payment aggregators who handle physical point of sale services. These regulations include minimum net worth requirements, amendments to certain existing directions as well as a timeline for compliance. The central bank has also invited public comments and feedback on the proposed regulations by May 31.

RBI seeks public comment

RBI on September 30, 2022 in its “Statement on Developmental and Regulatory Policies” had announced regulation of offline payment aggregators, who handle proximity and face-to-face payments.

The RBI had said that the current directions are proposed to be updated due to the growth in digital transactions and the significant role that payment aggregators play in this space. The updates which intend to further strengthen the payment ecosystem, can be seen in know your customers (KYC), due diligence of merchants, operations in Escrow accounts, etc.

Draft rules

As per the draft rules, non-banks payment aggregators providing physical point of sales services ( PA-Ps) should have a minimum networth of Rs 15 crore at the time of submitting application to the RBI for authorisation and a minimum networth of Rs 25 crore by March 31, 2028. The net worth of Rs 25 crore should be maintained at all times henceforth.

Meanwhile, new non-bank PA-Ps should have a minimum networth of Rs 15 crore at the time of submitting application to the RBI for authorisation. The RBI further added that these firms will have to attain a minimum networth of Rs 25 crore by end of the third financial year of grant of authorisation after which the net worth of Rs 25 crore should be maintained.

As per the RBI, while applying, the non-bank PA-P needs to submit a certificate from their statutory auditor, along with the latest audited statement(s) of financial accounts, to evidence compliance with the applicable net worth criterion

Meanwhile, new non-bank PA-Ps that may not have audited statement of financial accounts are required to submit a certificate from their statutory auditor regarding the current networth along with provisional balance sheet.

All the existing non-bank PA-Ps that do not comply with networth requirement or do not apply for authorisation within the stipulated time frame will have to close down PA-P activity by July 31, 2025.

"Banks shall close accounts of non-bank PA-P, existing as on the date of this circular, by October 31, 2025 unless such PAs produce evidence regarding application for authorisation submitted to the RBI," the RBI added.