The Reserve Bank of India (RBI) has conceptualised a lightweight payment and settlement system to address concerns about disruption in the communication system during a major emergency situation such as a natural calamity or a war.
The portable payments system could be operated on minimalistic conventional hardware and software, which would ensure uninterrupted transactions during times of crisis situation.
The independently operating payments system would be critical to establish the stability of the economy as well as ensuring continuity in the functioning of the government and other market-related transactions.
The existing conventional payments systems, including real-time gross settlement (RTGS), national electronic funds transfer (NEFT) and unified payments system (UPS) depend on complex wired networks based on advanced IT infrastructure to ensure the handling of large transaction volumes in an uninterrupted manner, states the RBI.
A crisis situation such as a natural calamity or a war can take a toll on communication and information infrastructure while temporarily disrupting these payments systems.
The RBI’s plan is to introduce a lightweight payment and settlement system that is designed to withstand any such exigency.
With the usage of minimalistic hardware and software, this system could be operated from anywhere under the guidance of a trained bare minimum staff, as per the RBI’s Annual Report 2022-23.
Its framework would be designed to provide simplified authentication and verification while maintaining records for reconciliation and audit purposes.
The core idea is that it will be activated only during a major emergency situation. It would be deployed to process critical transactions while aiming to ensure near-zero downtime in the payment and settlement system in India.
Such a resilient system can be suitably likened to a bunker equivalent when it comes to payment systems. It would also be fruitful in ensuring public confidence in digital payments and financial market infrastructure even during a crisis scenario.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.