Non-bank PSOs need approval for takeover or sale of business, says RBI

After approval, a public notice of at least 15 calendar days needs to be given before making the changes

The Reserve Bank of India (RBI) said on Monday said non-bank payment system operators (PSOs) will need its approval in case of a takeover that may or may not result in a change of management and sale or transfer of payment activity to an entity not authorised for undertaking similar activity.

The transferor non-bank PSO has to submit an application to the Department of Payment and Settlement Systems (DPSS), Central Office (CO), RBI, along with the required documents for any takeovers.

And, in case of sale of payment activity to an entity not authorized to undertake similar activity, the seller PSO has to apply to DPSS, CO, RBI for obtaining prior approval along with the minimum appropriate details. Also, the buyer will need to apply for authorization from the RBI. If the acquiring entity is a bank, it will have to apply to DPSS, CO, and RBI for approval.

“RBI shall endeavour to respond within 45 calendar days after receipt of complete details from both the entities. The timeline is not applicable in case of overseas principal in the Money Transfer Service Scheme”, said the central bank.

After obtaining RBI approval, a public notice of at least 15 calendar days needs to be given before effecting the changes. “Such public notice shall be given either separately by the authorised non-bank PSO and the buyer / acquirer bank / non-bank, or jointly by them. The public notice shall indicate the intention and reasons for such changes, particulars of the entities concerned, etc.”, RBI said.

Further, non-bank PSOs would also need to inform the central bank of any change in management or directors and sale or transfer of payment activity to an entity authorised for undertaking similar activity within 15 days.