RBI mulls lightweight payments & settlements for smooth ops during calamity

The system will ensure zero processing downtime during catastrophes such as natural disasters and war

The Reserve Bank of India is working on a Lightweight Payment and Settlement System (LPSS) to ensure that the processing of transactions continues without disruption during catastrophic events such as natural calamities and war. The system is expected to keep the liquidity pipeline of the economy alive and ensure economic stability.

Existing conventional payment systems such as RTGS, NEFT and UPI are designed to handle large volumes while ensuring sustained availability. Hence they are dependent on complex wired networks backed by the advanced IT infrastructure.

However, events such as natural calamities and war could temporarily hinder payment systems by disrupting the underlying information and communication infrastructure.

Therefore, it is prudent to be prepared to face such extreme and volatile situations. Keeping this aim in mind, RBI has conceptualised a lightweight and portable payment system that will be independent of conventional technologies and can be run from anywhere with bare minimum staff.

The system is expected to operate on minimalistic hardware and software and would be made active only when needed, RBI said in annual report for 2022-23.

LPSS would process transactions that are critical to ensure stability of the economy, such as government and market related transactions. Such a lightweight and portable payment system could ensure near-zero downtime of payment and settlement systems in the country.

It would also keep the liquidity pipeline of the economy alive and intact by facilitating uninterrupted functioning of essential payment services like bulk payments, interbank payments and provision of cash to participant institutions.

RBI said having such a resilient system is also likely to act as a bunker equivalent in payment systems and thereby enhance public confidence in digital payments and financial market infrastructure even during extreme conditions.