RBI Plans a Lightweight and Portable Payment System For Use During Emergencies

MUMBAI: The Reserve Bank of India (RBI) is working on a payment system that is lightweight and portable, which can be used during catastrophic events like natural calamities and war, for critical transactions. It is termed by RBI as a “bunker equivalent in payment systems.”

This was revealed by RBI in its latest annual report released on Tuesday.

The planned Lightweight and Portable Payment System (LPSS) is being designed to operate without use of conventional technologies and a bare minimum staff will be able to operate it from anywhere, the central bank divulged.

While existing payment systems like RTGS (Real Time Gross Settlement), NEFT (National Electronic Funds Transfer) and UPI (Unified Payments Interface) are able to handle large amounts and ensuring sustained availability, they are operated with the help of advanced IT infrastructure through complex wired networks.

However, these payment systems become temporarily unavailable in case of catastrophic events like natural calamities and war, when disruption is caused to the underlying information and communication infrastructure. This was stated by RBI on Tuesday, in its latest annual report.

With this scenario in mind, the RBI said, “Therefore, it is prudent to be prepared to face such extreme and volatile situations.”

Working around this objective, RBI has planned the LPSS design to work without use of conventional technologies and which can be operated by a bare minimum staff from any place.

”It is expected to operate on minimalistic hardware and software and would be made active only on a need basis. It would process transactions that are critical to ensure stability of the economy such as government and market-related transactions,” RBI said.

The central bank said that such a system could ensure minimum time for the payment and settlement system in the country. By ensuring uninterrupted functioning of bulk payments, interbank payments and provision of cash to participant institutions, it is also expected to help keep the economy’s liquidity pipeline alive and intact.

“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,” RBI added.

RBI also reported a robust growth of 57.8 per cent in terms of transaction volume during 2022-23, in the payment and settlement systems, on top of the previous year’s expansion of 63.8 per cent recorded, the report said.

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