Guidelines on Merchant Acquiring Business – Regional Rural Banks

RBI vide notification no. RBI/2019-20/156 dated February 06, 2020, Reserve Bank of India has been decided to allow RRBs to provide mobile banking services and to act as merchant acquiring banks using Aadhaar Pay – BHIM app and POS terminals.

In this connection, the guidelines are as under:

  • The RRB should have permission for mobile banking from the Reserve Bank of India.

Additional conditions:

  • 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.
  • The bank must ensure the necessary infrastructure for application development, safety, and security of the transactions and handling of customer grievances.
  • A customer grievance redressal mechanism duly approved by the bank’s board should be in place;
  • The bank should have a board-approved policy on merchant acquisition for card transactions;
  • There should not be any restrictions imposed on the bank for accepting deposits/ withdrawals by the Reserve Bank of India.
  • No penalty should have been imposed in the last two financial years.

Those RRBs which intend to act as merchant acquiring bank should have,

  • The net worth of ₹100.00 crores or more as on March 31 of the preceding financial year.
  • Minimum CRAR at 9%.
  • Net NPA below 5%.

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