All You Need to Know About RBI DPSC
The safety of financial transactions is even more important in the digital age of today. Due to the surge of individuals paying digitally, ensuring that security threats are minimized is imperative. To address this requirement, the Reserve Bank of India (RBI) has recently announced the Digital Payment Security Controls Guide in order to fulfill safe and secure digital transactions. This complete guide will cover everything about RBI DPSC such as its need, who all must follow it, and fundamental points of the substance of RBI DPSC.
1. What is RBI DPSC?
What is RBI DPSC: RBI Master Direction on Digital Payment Security Controls (RBI DPSC) issued on 18th February 2021 The guidelines set down security controls to be followed by the regulated entities in different spaces related to digital payments. RBI DPSC, in essence, seeks to build an environment, which would allow customers to perform digital payments with confidence while creating liability and responsibility for the banks/fi/web portal.
2. Who Needs to Follow RBI DPSC?
The RBI DPSC may not be anticipated for all categories in the financial sector. For a few predetermined entities only, including Scheduled Commercial Banks (Excluding Regional Rural Banks), Small Finance Banks, Payments Banks, and Credit card issuing Non-Banking Financial Companies (NBFCs).
These entities, known as Regulated Entities (REs) have to comply with the provisions of the Master Directions. The stakes are high given that the RBI is targeting a bulk of digital transactions in India involving these key players in the digital payment ecosystem.
3. The Purpose and Benefits of RBI DPSC
The RBI DPSC was released by Reserve Bank of India (RBI) to provide a common platform for enabling licensed Banks, Scheduled Banks, Primary Dealers and authorized Payment Service Providers (PSPs) to opt for membership in different payment systems. The DPSC provides a blueprint to bring all players in a digital payment ecosystem to a high standard of security.
4. Understanding the Different Payment Systems
In order to understand the intricacies of RBI DPSC, it is imperative to be aware of the different types of payment systems that are part of this diagram. These criteria determine which systems are centralized and which are decentralized payment systems.
These include Real Time Gross Settlement (RTGS), National Electronic Fund Transfer (NEFT) and others as outlined by the Reserve Bank of India. Illustration: Cheque Truncation System Centers and Express Cheque Clearing System Center Ii(Decentralized Payment systems maintained by respective clearing houses under the aegis of RBI)
5. Membership Types and Eligibility
RBI categories Payment system into four types of the membership- Type A (Scheduled and licensed banks – RTGS & NEFT), Type B(Primary Dealers -RTG S), Type C(Card Networks-RTGS) and Type D (Prepaid issuers/ATM Operators-RTGS). Decentralized systems can have unlicensed banks as sub-members. Secondly, co-operative societies are not eligible and thirdly, the postal savings banks can be part of a decentralized system.
Conclusion
RBI moved towards the safety and security of digital transactions in India with its Digital Payment Security Controls (DPSC). The goal of this DPSC is to prepare a framework to ensure that customers are provided with the best services by all regulated entities, which will make the digital payment ecosystem strong and robust for both financial institutions and customers.