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RBI exploring disaster-proof payments
June 05, 2023
The Reserve Bank of India (RBI) has proposed a ‘lightweight payment system’ in its annual report, which the central bank believes should be a fallback option during extreme and volatile situations.
The RBI has termed the Lightweight Payment and Settlement System (LPSS) the “bunker equivalent” for payment systems, drawing a parallel with the safety bunkers that are created by nations to shield the population during enemy attacks in wars, natural and anthropogenic disasters, and other such scenarios.
The lightweight system is envisioned to be a payment facilitator in scenarios where other payment systems are rendered temporarily unavailable due to disruption of the underlying information and communication infrastructure caused by catastrophic events such as natural disasters and conflict.
RBI says it is prudent to be prepared to face extreme and volatile situations. It has conceptualised a lightweight and portable payment system “that will be independent of conventional technologies and can be operated from anywhere by a bare minimum staff”.
Given that the LPSS will have minimal hardware and software requirements, it is expected that a catastrophic event won’t impede its performance. Such a system would be needed to process transactions critical to ensuring the stability of the economy, such as government and market-related transactions.
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