New M&A Norms For Payment System Operators

Payment and settlement systems are essential for the smooth functioning of financial markets, individual remittances, financial inclusion and growth of the economy as a whole. For this reason, central banks across the globe take a keen interest in their safe and efficient functioning. Likewise, the Reserve Bank of India ("RBI"), sets the necessary regulatory framework, to ensure that different types of payment systems operate in a safe, secure and efficient manner to meet the needs of varied segments of society. The RBI in terms of the powers vested with it by the Payment and Settlement Systems Act, 2007 regulates payment systems as well as payment system operators ("PSOs"). Recently, the RBI has issued a notification dated July 4, 2022 ("Notification")¹ that requires all non-bank PSOs to procure prior approval of the RBI for: