The Reserve Bank of India on Wednesday extended Real-time gross settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities to non-bank payment system operators.

Until now, only banks were allowed to use RTGS and NEFT payments facilities. Now, non-bank payment systems like prepaid payment instruments (PPI), card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms can take direct membership in the central bank-run RTGS and NEFT.

“This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments," RBI governor Shaktikanta Das said.

RTGS is a system where there is a continuous and real-time settlement of fund transfers, individually on a transaction by transaction basis (without netting). NEFT, on the other hand, is a nationwide centralised payment system (CPS) owned and operated by the central bank.

Though non-bank payment systems like PPIs and card issuers will not be eligible for any liquidity facility from the RBI to facilitate settlement of their transactions via the CPSs, they can now leverage the NEFT and RTGS infrastructure for fund transfer. This is expected to give a boost to online payments and the digitisation of the Indian economy.

Das said that PPI issuers, card networks, white label ATM operators and TReDS platforms have grown in importance and volume by innovation over the last few years.