RBI to launch Lightweight Payment and Settlement System | Fusion - WeRIndia

RBI to launch Lightweight Payment and Settlement System

RBI to launch Lightweight Payment and Settlement System

India’s progress in digital payments has been remarkable, but it also poses potential risks. To address this issue, the Reserve Bank of India (RBI) has proposed an innovative solution called the Lightweight Payment and Settlement System (LPSS).

India has emerged as a global leader in digital payments, with its e-payment infrastructure serving as a benchmark for other countries.

However, the country’s constant pursuit of improvement is driven by the recognition that the existing system must be fortified.

LPSS is envisioned as the missing piece in India’s digital payment landscape. Conventional payment systems, such as RTGS, NEFT, and UPI, are highly dependent on complex wired networks and sophisticated IT infrastructure.

While these systems are designed to handle high transaction volumes and ensure sustainability, they remain vulnerable to disruptions caused by natural disasters or even war.

The RBI recognizes that these systems could become unavailable if the underlying information and communication infrastructure is compromised. This is where LPSS steps in.

Unlike its conventional counterparts, LPSS is designed to be independent of existing technologies. It will be a lightweight and portable system that springs into action only when needed.

By having minimal hardware and software, LPSS aims to ensure almost-zero downtime, thereby preserving the liquidity of the economy.

It will prioritize processing transactions critical to the country’s economic stability. These include bulk payments, interbank transfers, and providing cash to participant institutions.

The introduction of LPSS is expected to instill public confidence in digital payments. The system will act as a robust bunker, fortifying India’s payment systems against adverse conditions.

Even in the face of disruptions, LPSS will enable the seamless functioning of the economy. This enhanced reliability will undoubtedly bolster public trust in digital payment methods.

India’s evolution as a leader in digital payments brings forth new challenges and risks. The RBI recognizes the need for a solution that can ensure uninterrupted financial services and mitigate potential disruptions.

The Lightweight Payment and Settlement System (LPSS) has been conceptualized as an independent and resilient system that will operate alongside existing technologies.

Image Credit: Anurag Vijay 03, CC BY-SA 4.0, via Wikimedia Commons

Image Reference: https://commons.wikimedia.org/wiki/File:Reserve_Bank_Of_India_-_RBI_Mumbai.jpg

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