Reserve Bank of India is working on a light weight and portable payment system, a "bunker equivalent in payment systems", that can be used for critical transactions during catastrophic events like natural calamities and war.
The proposed Light weight and Portable Payment System (LPSS) will be independent of conventional technologies and can be operated from anywhere by a bare minimum staff, according to the central bank.
Existing conventional payment systems like RTGS (Real Time Gross Settlement), NEFT (National Electronic Funds Transfer) and UPI (Unified Payments Interface) are designed to handle large volumes while ensuring sustained availability. These systems are dependent on complex wired networks backed by advanced IT infrastructure.
However, catastrophic events like natural calamities and war have the potential to render these payment systems temporarily unavailable by disrupting the underlying information and communication infrastructure, RBI said in its latest annual report released on Tuesday.
"Therefore, it is prudent to be prepared to face such extreme and volatile situations," it said.
Keeping this objective in mind, RBI has conceptualised the LPSS that will be independent of conventional technologies and can be operated from anywhere by a bare minimum staff.
"It is expected to operate on minimalistic hardware and software and would be made active only on a need basis. It would process transactions that are critical to ensure stability of the economy such as government and market related transactions," RBI said.
Such a system, the central bank said could ensure near zero downtime of payment and settlement system in the country. It will also help keep the liquidity pipeline of the economy alive and intact by facilitating uninterrupted functioning of essential payment services like bulk payments, interbank payments and provision of cash to participant institutions.
"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," RBI said.
During 2022-23, the payment and settlement systems recorded a robust growth of 57.8 per cent in terms of transaction volume on top of the expansion of 63.8 per cent recorded in the previous year.
The share of digital transactions in the total volume of non-cash retail payments increased to 99.6 per cent during 2022-23, up from 99.3 per cent in the previous year.