Lightweight Payment System proposed by RBI will ensure Secure Transactions in Extreme Situations
MAS Team | 01 June 2023
The Reserve Bank of India (RBI) is preparing to revolutionize the Indian payment landscape with its innovative lightweight payment and settlement system (LPSS). In its recently published annual report for 2023-24, the central bank revealed its ambitions to introduce LPSS, aiming to develop a robust and portable solution that can operate in any environment with minimal staff.
The RBI emphasised that the LPSS can be activated selectively and operated from anywhere by a bare minimum workforce, recognising the significance of being ready for catastrophic emergencies including those involving natural disasters and wartime scenarios. This strategic approach assures the system's resilience and availability precisely when needed.
The LPSS is proposed to be a viable alternative in emergency situations by operating independently of conventional payment systems including RTGS, NEFT, and UPI. It facilitates key market- and government-related transactions that are necessary for preserving economic stability. Even in the face of disasters, the LPSS uses cutting-edge technology to enable secure and guaranteed digital payments.
Unlike real-time gross settlement (RTGS), National Electronic Fund Transfer (NEFT), and Unified Payments Interface (UPI), which rely on complicated wired networks and advanced IT infrastructure, the LPSS provides a unique architecture that is independent of existing systems. This ensures that natural disasters and war do not affect the underlying information and communication infrastructure, enabling payment services to operate uninterrupted.
The RBI hopes that by implementing LPSS, it will improve the safety, efficiency, and reliability of the country's payment systems. This innovative approach ensures the provision of critical payment services even in harsh and volatile conditions. The LPSS runs on simple hardware and software, making it portable and lightweight, ready to be activated as needed.
The RBI's visionary step towards proposing LPSS exemplifies its dedication to resilience and continuity in the face of adversity. By leveraging advanced technology and strategic operational protocols, the central bank aims to ensure secure and efficient digital transactions, fostering economic stability even during challenging times.