RBI issues guidelines on Merchant acquiring business

Feb 07, 2020 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Reserve Bank of India (RBI) on February 06, 2020, issues guidelines on Merchant acquiring business. RBI has decided to allow all Regional Rural Banks (RRBs) to act as merchant acquiring bank using Aadhar Pay, BHIM app and POS terminals and shall be permitted to deploy their own devices, provided it takes prior permission from RBI and have net worth of Rs. 100.00 crore or more as on March 31 of the preceding financial year, minimum CRAR at 9% and net NPA below 5%.

The RRBs are required to fulfil the following conditions:-

a) The bank's IT systems & CBS should have been subjected to an IS Audit not earlier than six months from the date of application to confirm that the system is adequately secure.

b) The bank must ensure necessary infrastructure for application development, safety and security of the transactions and handling of customer grievance.

c) A customer grievance redressal mechanism duly approved by the bank's board should be in place;

d) The bank should have a board approved policy on merchant acquisition for card transactions;

e) There should not be any restrictions imposed on the bank for accepting deposits/ withdrawals by Reserve Bank of India.

f) No penalty should have been imposed in last two financial years.

The RRBs may be required to comply with instructions and guidelines on Merchant Acquisition for card transactions and POS issued by Department of Payment and Settlement Systems, RBI from time to time. RRBs shall inform the respective Regional Offices of Reserve Bank, within a period of 15 days from the date of operationalising the merchant acquisition business.

[RBI Notification No. DOR.RRB.BL.BC.No.31/31.01.001/2019-20]


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