Revised Regulatory Framework for Bharat Bill Payment Systems (BBPS)
- March 1, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Revised Regulatory Framework for Bharat Bill Payment Systems (BBPS)
Subject: Economy
Section: Monetary Policy
Objective:
- The Reserve Bank of India (RBI) has introduced a revised regulatory framework for BBPS to align with developments in the payments landscape.
- Effective from April 1, 2024, the new framework aims to streamline bill payment processes, enhance participation, and bolster customer protection.
Operational Structure:
- BBPS functions on a tiered structure comprising:
- NPCI Bharat Bill Pay Ltd (NBBL) as the Central Unit (BBPCU).
- Bharat Bill Payment Operating Units (BBPOUs).
- Agent networks of BBPOUs.
Role of NBBL:
- NBBL, a wholly-owned subsidiary of the National Payments Corporation of India (NPCI), serves as the Payment System Provider for BBPS.
- It operates a platform connecting customers and billers, facilitating clearing and settlement activities for transactions routed through the BBPCU.
Responsibilities of NBBL (BBPCU):
- Establish rules, participation criteria, and technical standards for the system.
- Ensure guaranteed settlement of all transactions via NBBL, preventing fund flow through any Technology Service Provider (TSP).
Dispute Resolution:
- NBBL must implement a centralized dispute resolution framework for end-to-end complaint management.
- Integrated system for participating entities allows customers and billers to raise and resolve disputes as per the framework.
Participation of Entities:
- Banks, non-bank Payment Aggregators (PAs), and authorized BBPOUs can participate as Operating Units.
- Banks and non-bank PAs do not require separate authorization for BBPS participation.
- Non-bank BBPOUs must open an escrow account with a Scheduled Commercial Bank exclusively for BBPS transactions.
Functioning of Non-bank BBPOUs:
- Non-bank BBPOUs act as Payment Aggregators (PAs) when collecting or settling funds with onboarded billers.
- The BBPOU’s payment system is deemed a ‘designated payment system’ for the maintenance of the escrow account, as per the guidelines.
The revised regulatory framework for BBPS by RBI aims to enhance efficiency, transparency, and customer protection in bill payment systems. It empowers various entities to participate, ensures secure fund management, and establishes a robust dispute resolution mechanism for the benefit of customers and billers alike.
NPCI (National Payments Corporation of India):
- NPCI is the 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) under the provisions of the Payment and Settlement Systems Act, 2007.
- NPCI plays a crucial role in promoting cashless transactions and digital payments across the country.
- It develops and manages various payment systems like UPI (Unified Payments Interface), IMPS (Immediate Payment Service), and RuPay.
BBPS (Bharat Bill Payment System):
- BBPS is a centralized bill payment system in India that offers interoperable and accessible bill payment services to customers.
- It enables individuals to pay their bills online through a single platform.
- BBPS covers a wide range of billers including electricity, water, gas, direct-to-home (DTH), telecom, and more.
NPCI Bharat Bill Pay Ltd (NBBL):
- NBBL is a wholly-owned subsidiary of NPCI.
- It operates as the Central Unit (BBPCU) in the BBPS framework.
- NBBL acts as the Payment System Provider for BBPS, providing the platform that connects customers and billers.
BBPOUs (Bharat Bill Payment Operating Units):
- BBPOUs are entities authorized to operate as part of the BBPS.
- They function as intermediaries between customers and billers, facilitating the bill payment process.
- BBPOUs are responsible for onboarding billers onto the BBPS platform and handling customer transactions.
BBPCU (Bharat Bill Payment Central Unit):
- BBPCU is the Central Unit of the BBPS system, operated by NBBL.
- It serves as the core infrastructure for the BBPS, overseeing the entire bill payment process.
- BBPCU sets the rules, standards, and guidelines for participation in the BBPS ecosystem.
- The BBPCU ensures seamless transactions, proper clearing, and settlement of funds between customers and billers.
In summary, NPCI is the overarching organization overseeing payment systems in India,
BBPS is the bill payment system,
NBBL is the entity managing the BBPS platform as the BBPCU,
BBPOUs are the operational units handling transactions, and
BBPCU is the central infrastructure ensuring the smooth functioning of the entire BBPS ecosystem.
Unified Presentment Management System (UPMS) introduced by NPCI BillPay Ltd. (NBBL) – NPCI BillPay Ltd. (NBBL), a wholly-owned subsidiary of the National Payments Corporation of India (NPCI), has launched a new functionality known as the Unified Presentment Management System (UPMS). The primary aim of UPMS is to enrich and simplify the process of bill payments in India, offering a more convenient and efficient solution to customers.
Key Features of UPMS:
- Standing Instructions Setup
- Automated Bill Fetching
- Centralized Infrastructure
- Democratizing Bill Payments
- Opportunity for Fintech and Service Providers
- Real-Time Updates