On May 30, the Reserve Bank of India released its annual report detailing its newly conceptualized Lightweight Payments and Settlement System (LPSS). This payment system is meant to facilitate transactions in catastrophic events like natural calamities and wars. Why it matters: As per RBI’s claims, conventional payment systems (like the RTGS, NEFT, and UPI) perform high volumes of transactions and to do so they depend on complex wired networks backed by advanced IT infrastructure. Thus, during volatile situations, when the underlying information and communication infrastructure is disrupted they might not be able to function. This highlights the utility of a new payment system that can work independently of these conventional technologies. What does Lightweight Payments and Settlement System entail: RBI says that the LPSS system would operate on minimalistic hardware and software and would be made active only on a need basis. It says that LPSS would conduct transactions that are critical to economic stability, such as government and market transactions. It says this system would be operable from anywhere and require a bare minimum of staff to function. While the report calls to attention the problem with existing systems, it gives very little detail on how the LPSS will work and when it can be expected. How are existing payment systems performing: RBI says that “ 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.”…
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RBI to introduce a new lightweight payment system, calls it “a bunker equivalent in payment systems”
The Lightweight Payments and Settlement System is meant to enable transactions in catastrophic events like calamities and wars.
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