RBI Tasks NPCI Bharat BillPay Ltd. for Interoperable Internet Banking System

RBI Tasks NPCI Bharat BillPay Ltd. for Interoperable Internet Banking System

Subject: Economy

Section: Monetary Policy

The Reserve Bank of India (RBI) has taken steps to accelerate the settlement of funds for merchants by directing NPCI Bharat BillPay Ltd. (NBBL) to implement an interoperable system for Internet Banking.

RBI emphasizes the benefits it will bring to various payment transactions such as income tax, insurance premiums, mutual fund payments, and e-commerce.

Current Scenario and Challenges:

• Non-Interoperability: Presently, transactions processed through Payment Aggregators (PAs) lack interoperability. This means that each bank needs to integrate separately with different PAs of various online merchants. With multiple PAs in the ecosystem, it becomes challenging for banks to integrate with each one individually.
• Delays and Settlement Risks: The absence of a standardized payment system and rules leads to delays in the receipt of payments by merchants and poses settlement risks.

Objective of the Interoperable System:

• Facilitate Quicker Settlement: The primary goal of the new interoperable system is to expedite the settlement of funds for merchants, enabling faster and smoother transactions.
• Simplified Transactions: By creating an interoperable framework, customers will no longer need specific arrangements between the merchant’s PA and their bank for payments.

RBI’s Approval and Implementation Timeline:

• Approval to NPCI Bharat BillPay Ltd.: The RBI has approved NPCI Bharat BillPay Ltd. to implement the interoperable system for Internet banking transactions.
• Expected Launch: The implementation of this new system is anticipated within the current calendar year, promising a more efficient and seamless payment experience.

Benefits for Stakeholders:

1. Merchants:
   • Faster and more reliable settlement of funds.
   • Reduced settlement risks and delays in receiving payments.
2. Banks:
   • Simplified integration process with a standardized interoperable system.
   • Enhanced efficiency in handling Internet banking transactions.
3. Customers:
   • Seamless payment experience without the need for multiple arrangements.
   • Quicker processing of transactions for various services such as insurance, mutual funds, and e-commerce.

Conclusion:

The RBI’s directive to implement an interoperable Internet banking system through NPCI Bharat BillPay Ltd. marks a significant stride towards streamlining digital payments in India.

NPCI – National Payments Corporation of India

• About: NPCI is an umbrella organization for operating retail payments and settlement systems in India. It is an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
• Role: NPCI develops and operates payment systems like Unified Payments Interface (UPI), Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), and more.

NBBL – NPCI Bharat BillPay Ltd.

• About: NBBL is a subsidiary of NPCI, specifically focused on the Bharat Bill Payment System (BBPS).
• Role: NBBL operates the BBPS, which is a centralized bill payment system in India that allows users to pay bills and make recurring payments

BBPS – Bharat Bill Payment System

• About: BBPS is a centralized system in India for payment of bills and other services.
• Role: It provides a one-stop solution for payment of utility bills, such as electricity, water, gas, telephone, and more. Users can make these payments through multiple channels, including online platforms, mobile apps, agents, and bank branches.

In brief:

• NPCI is the overarching organization responsible for retail payments in India.
• NBBL is its subsidiary dedicated to operating the BBPS, which is a centralized bill payment system allowing users to pay various bills through different channels.