RBI redefines "networth" under Payment Act

The Reserve Bank today changed the definition of "networth" for entities authorised under the Payment and Settlement Systems Act.
"To have uniformity and clarity in respect of the computation of networth for an entity authorised under the Payment and Settlement Systems Act, it is advised that networth will consist of paid-up equity capital, free reserves, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of assets," RBI said in a notification.
However, the networth would not have reserves created by revaluation of assets adjusted for accumulated loss balance, book value of intangible assets and deferred revenue expenditure, if any, it said.

The new definition would apply for the purpose of all approvals under the Payment and Settlement Systems Act.
Under the Act, an entity operating a payment system within the country has to obtain authorisation from RBI. The RBI has from time to time issued guidelines in respect of the eligibility criteria for authorisation of payment system operators, including PPI issuers, overseas principals for money transfer service scheme and card network operators, among others.
These entities have to comply with the requirements of minimum paid-up capital and net-worth, as applicable.