On 04-07-2022, the Reserve Bank of India (‘RBI') has issued a circular determining the requirements for obtaining prior approval in case of any takeover or/and acquisition of control of non-bank Payment System Operators (‘PSOs') and sale or transfer of payment system activity of the same.

Key Points:

  1. Prior approval of RBI is required in the case of:

    • Change of management may or may not change in case of takeover/ acquisition: an application, information about the proposed directors and complete details about the new shareholders must be submitted to Department of Payment and Settlement System (‘DPSS'), Central Office (‘CO') and to Securities and Exchange Board of India (‘SEBI').

    • Sale/ Transfer of payment activity to an entity not authorized for undertaking similar activity: the seller must apply for authorization along with the requisite application fee.

    • In case a bank is an acquiring entity then it must apply to DPSS, CO and RBI for approval.

    • Sale/ transfer can be proceeded once Certificate of Authorization (‘CoA') is obtained.

    • The seller PSO must surrender its CoA according to the process mentioned in RBI circular dated 12-05-2016.

  2. Non- bank PSOs must inform RBI within 15 days in case of change of management or directors and in case of sale/ transfer.

  3. RBI must respond within 45 days after the receipt of complete details from both seller and buyer.

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