The Reserve Bank of India (RBI) has mandated that non-bank payment system operators (PSO) will need to obtain its approval before sanctioning any acquisition or a takeover in a notification uploaded on July 4, 2022. These entities will also have to obtain RBI’s approval in case of a sale or a transfer of payment activity to unauthorised entities, the order continued. Why it matters: The fintech sector has been on the RBI’s radar consistently of late. The notification is another example of the RBI tightening its regulatory noose around fintechs as many of the companies which provide payment services are start-ups. They are likely to be most impacted by this notification. What are the provisions in the notification: The RBI directed non-bank PSOs to inform the central bank about the proposed acquisition or sale within 15 calendar days. It also added that the notification has come into effect. The RBI wrote that it will “endeavour” to respond within 45 calendar days after receiving the application. What will happen in case of a takeover/ acquisition: The RBI clarified that the approval will be needed regardless of whether there is a change in management. The non-bank PSO will have to submit an application to the Department of Payment and Settlement Systems (DPSS) along with the following documents— Information about the proposed directors, Details about the new shareholders, etc. What will happen in a sale/ transfer of payment activity to an unauthorised entity: The non-bank PSO will have to submit an application to the…
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