In a major regulatory update for India’s digital payments ecosystem, the Reserve Bank of India (RBI) has released revised authorisation norms for payment system operators, introducing perpetual licence validity along with stricter governance, ownership, and compliance requirements.
The new Master Directions on Authorisation to Operate a Payment System, issued under the Payment and Settlement Systems Act, 2007, apply to both existing and new Payment System Operators (PSOs). The framework also formalises on-tap licensing, allowing entities to apply for authorisation at any time.
One of the biggest changes is the introduction of perpetual validity for Certificates of Authorisation (CoA). However, operators must continue meeting regulatory requirements, maintain satisfactory inspection records, and avoid major supervisory concerns. Existing operators that fail to meet these conditions will receive renewals for 1 year at a time until compliance is achieved. Failure to comply could result in withdrawal of authorisation.
The RBI has also strengthened governance standards by introducing stricter “fit and proper” criteria for promoters, directors, and group entities. The revised norms include checks related to financial integrity, criminal records, regulatory restrictions, and overall financial soundness. In addition, net-worth calculations have been standardised with clear guidelines covering capital, reserves, and intangible assets.
Ownership regulations have also been tightened. Investments from jurisdictions identified as non-compliant by the Financial Action Task Force (FATF) will face restrictions, with aggregate voting rights capped below 20% and limits imposed on acquiring significant influence in payment system operators.
The framework further introduces a mandatory cooling-off period of 1 year for entities whose authorisation has been revoked, rejected, not renewed, or voluntarily surrendered. During this period, reapplication will not be allowed, although the RBI may relax the requirement in exceptional cases.
For entities seeking voluntary closure, the central bank has prescribed detailed procedures, including settlement of all customer and merchant liabilities, escrow transparency, public notices, periodic progress reports, and a “no liability” certificate from statutory auditors. Unsettled claims can remain valid for up to 3 years.
The RBI said the revised framework is aimed at strengthening oversight, improving financial system integrity, and ensuring smooth entry, operation, and exit of participants within India’s growing digital payments sector.
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