RBI notifies the Master Directions on Authorisation to operate a Payment System

The Reserve Bank of India (“RBI“) has issued the Master Directions on Authorisation to Operate a Payment System consolidating the extant circulars and guidelines in connection with Payment System Operators, dated June 15, 2026 (“PSO MD“).

The Key highlights of the PSO MD include inter alia the following:

• Applicability: The PSO MD apply to: (a) an entity applying for authorisation to operate a payment system under the Payment and Settlement Systems Act, 2007 (“PSS Act”); and (b) an entity authorised to operate a payment system under the PSS Act.

• Eligibility Criteria and Requirements: The key eligibility criteria and requirements include inter alia the following:

• • an entity seeking authorisation to operate a payment system shall submit an application in the prescribed form through RBI’s PRAVAAH portal;
  • the capital requirement shall be in accordance with the guidelines/ directions issued for the specific payment system;
  • the entity / promoters / promoter groups, shall conform to the RBI’s ‘fit and proper’ criteria, including but not limited to – (a) the entity shall have a past record of sound credentials and integrity, (b) Director of a Promoter Company / Group Company shall have a record of financial integrity; good reputation and character; honesty; etc.; (c) such person shall not have incurred any of the disqualifications set out therein (such as, declared insolvent and not discharged, is financially not sound, etc.).

• Validity Period of Certificate of Authorisation: The Authorisation to operate a payment system to a new entity will be given on a perpetual basis. Further, for an existing authorised Payment System Operator (PSO), perpetual validity may be provided when the Certificate of Authorisation (CoA) becomes due for renewal, subject to its adherence to the following: (i) Full compliance with the terms and conditions subject to which authorisation was granted; (ii) No major regulatory or supervisory concerns related to operations of the PSO; and (iii) No adverse reports from other departments of RBI / regulators / statutory bodies, etc.

• Voluntary Surrender of CoA by PSOs Authorised under PSS Act: A PSO, authorised under PSS Act, intending to discontinue its payment system operations may apply to the RBI for voluntary surrender of its CoA. In terms of the process for such voluntary surrender, the key steps include inter alia the following –  a PSO needs to submit a request in writing, signed by its authorised signatory, to Department of Payment and Settlement Systems (DPSS), Central Office (CO), RBI, Mumbai along with the documents stated therein. Based on the merits of the case, the RBI will process such requests and advise the entity to initiate the process regarding the further course of action, as applicable (which shall include intimation to all stakeholders through digital communication on registered mobile number (SMS, in-app notifications, etc.) and email-id, about its intent to close its payment system operations,  issuing a public notice in English, Hindi and a vernacular language, in print/visual media, on three different occasions, informing the customers / merchants / agents / banks, etc., about its intent to close its payment systems operations, etc.). On completing the process of extinguishing liabilities to customers / merchants / agents / banks, etc., (as applicable), the entity would be required to submit a ‘No Liability’ certificate, certified by its Statutory Auditor. On receipt of the advice from the RBI about acceptance of the request for voluntary surrender of CoA, the entity shall submit the original CoA to DPSS, CO, RBI, Mumbai for cancellation.

• Cooling Period: The RBI may impose a cooling period of one year in the following situations – authorised PSOs whose CoA is revoked or not renewed for any reason; or CoA is voluntarily surrendered for any reason, etc. During the cooling period the entities shall not be allowed to submit an application for operating any payment system under the PSS Act. 

Conclusion:

The PSO MD represents a significant step towards streamlining the regulatory framework for payment system operators by consolidating existing RBI directions into a single master document. By introducing perpetual authorisations, clarifying eligibility and governance requirements, and prescribing structured mechanisms for voluntary surrender and regulatory action, the directions enhance regulatory certainty and operational clarity for existing and prospective PSOs. The framework is expected to support the continued growth of India’s digital payments ecosystem while ensuring robust oversight and consumer protection.