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‘RBI not for free licensing of payments sector’

Mumbai, Feb 20: Launching the BharatQR mobile payments acceptance system here on Monday, RBI Deputy Governor R. Gandhi said granting licences to payment service providers cannot be an automatic “tick box exercise” and such entities need to be selected as per proper selection criteria.

“There is an implied suggestion that this (payment) sector needs to be freed of licensing mechanism and once a set of criteria are fixed, any number of entities meeting those criteria should be allowed to function. We differ from this idea,” Gandhi said launching the payments solution developed as per directions given by the Reserve Bank of India. “Such a free entry may not be appropriate for payment industry. We must remember that the payment service provider is entrusted with money and therefore fit and proper criterion is of utmost importance and consequently, free entry based on tick box exercise will not be right and it can pose a risky proposition to the system as a whole,” he said.

“When you keep the money of the public in ‘account’, you are a fincial entity taking deposits and you must be public trustworthy and so be regulated as a deposit taking fincial entity,” he added. Citing the examples of Prepaid Payment Instrument (PPI) issuers, Bharat Bill Payment System (BBPS) operating units, Trade Receivables Discounting System (TReDS), White Label ATMs (WLAs) and other payment aggregators, Gandhi said there is a misconception that non-bank entities are being discrimited as compared to the banking entities in the payment system are.(IANS)