The new system will be resilient to disruptions and easier to use in remote areas.
New Delhi:
The Reserve Bank of India (RBI) is developing a new lightweight and portable Payment and Settlement System (LPSS). The system will be independent of traditional technologies and can be operated from anywhere with a small number of staff.
Here are 5 points on the new payment system:
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The payment system is expected to be “bunker-like” lightweight and portable, using minimal hardware and software. It will only be activated when needed, such as during a natural disaster or other catastrophic event.
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The system would process transactions that are critical to the stability of the economy, such as government and market-related transactions. This would help to ensure that the economy is able to function smoothly and that there is no disruption to the flow of money.
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“Having such a resilient system is also likely to act as a bunker equivalent in payment systems and thereby enhance public confidence in digital payments and financial market infrastructure even during extreme conditions,” the RBI Annual Report for 2022-23 read.
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The payment systems in India, such as UPI, RTGS, and NEFT, are designed to handle large volumes of transactions and ensure continuous availability. However, they rely on complex wired networks and advanced IT infrastructure. The new system is designed to be used in extreme and volatile situations, such as natural disasters and war.
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The central bank’s report highlighted the need for preparedness in the face of extreme and volatile situations. The report noted that such situations can have a significant impact on the economy and financial system.
