The Reserve Bank of India (RBI) has announced plans to develop a lightweight and portable payment system that can be used in catastrophic events such as natural disasters and war. The system, which is still in the conceptual stage, would be independent of conventional technologies and can be operated from anywhere by a bare minimum of staff.
The RBI said that the new system would be designed to ensure near-zero downtime of the payment and settlement system in the country. It would also help to keep the liquidity pipeline of the economy alive and intact by facilitating the uninterrupted functioning of essential payment services such as bulk payments, interbank payments, and the provision of cash to participant institutions.
The RBI said that the new system would be a “bunker equivalent in payment systems” and would help to enhance public confidence in digital payments and financial market infrastructure even during extreme conditions.
The existing conventional payment systems, such as the real-time gross settlement (RTGS), National Electronic Fund Transfer (NEFT), and Unified Payments Interface (UPI),
are designed to handle large volumes while ensuring sustained availability. However, they are dependent on complex wired networks backed by advanced IT infrastructure.
Catastrophic events such as natural disasters and war have the potential to render these payment systems temporarily unavailable by disrupting the underlying information and communication infrastructure.
The RBI said that it was prudent to be prepared to face such extreme and volatile situations. The new lightweight and portable payment system would help to ensure that the payment and settlement system in the country remains operational even in the event of a catastrophic event.
Benefits of the new system:
• The new system would be independent of conventional technologies, making it less vulnerable to disruptions caused by natural disasters or war.
• The system would be portable and could be operated from anywhere, making it ideal for use in remote or difficult-to-access areas.
• The system would be designed to handle large volumes of transactions, making it suitable for use by both individuals and businesses.
• The system would be affordable, making it accessible to all segments of the population.
The RBI said that it was still in the early stages of planning for the new system and that it would release more details in due course.
