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The Reserve Bank of India (RBI) brought out a notification on maintenance of escrow account with a scheduled commercial bank in India. This notification was brought into force on 17 November 2020. Such notification was brought vide RBI/2020-21/68 DPSS.CO.PD.No.660/02.14.008/2020-21. This notification is not only directed to schedule commercial banks, but also affects different participants in the digital banking sector. Such participants will include Payment Aggregators (PA), Payment Gateways (PG) and Pre-paid payment Instruments (PPI).
The notification is an order from the RBI that all authorised PPI and PA are allowed to maintained escrow account with scheduled commercial bank. Apart from this, the RBI considered the risk system where diversification can be established. To spread out the risk, such operators are allowed to maintain another escrow account with a scheduled commercial bank.
This notification was given considered section 18 read with section 10(2) of the Payment and Settlement of Systems Act, 2007. Such notification has amended the master direction on ‘Issuance and Operation of PPI (PPI-MD) which was issued in the year 2017-18. This notification also affected the master direction on PA and PG.
The following amendments have been considered by the RBI for Operation of PPI (PPI-MD) :
Other amendments related to escrow account in scheduled commercial bank for Regulation of Payment Aggregators (PAs) and Payment Gateways (PGs):
Read our article:Guidelines mandated by RBI on Regulation of Payment Aggregators
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