Dear Readers,

Bill payment and settlement systems in India have been in the
news often and can be very important for your upcoming exams. The Bharat Bill
Payment System (BBPS) is a new framework introduced by the RBI. Let us understand
what the system is, its need, structure and scope, among other pertinent details.

On October 20, 2015, the Reserve Bank of India invited
applications for authorisation from banks and non-banks financial institutions,
currently engaged in bill payments and interested in operating as Bharat Bill
Payment Operating Units (BBPOUs) under the Bharat Bill Payment System
(BBPS).

Entities are compulsorily required to apply for approval to the
central bank on or before November 20, 2015, under the Payment and Settlement
Systems (PSS) Act 2007. As per the RBI notification, those that fail to apply
for authorisation but continue to engage in bill payment activities would be deemed
as conducting the business in violation of the BBPS guidelines, and may be penalised
by the RBI.

What is the BBPS?

The BBPS has been conceived as an authorised payment system,
which will help track payments being made in the economy, including cash
payments to utilities, schools, and telcom firms, among others.

The need for BBPS

–
Citing that over 30,800 bills worth Rs.6223
billion are annually generated across India’s top 20 cities, in 2013, the RBI Committee
headed by G Padmanabhan suggested a GIRO-based (transfer of payments from bank
account to another initiated by the payer) Indian bill payment system.

–
The committee felt that though existing systems
were safe, they did not enable customers to pay a variety of bills (utility
bills, school fees, etc) due to lack of-interoperability in payment processes
and access to different modes of electronic payments.

–
Hence the need for an “integrated bill payment system that offers interoperable and
accessible bill payment services to customers through a network of agents,
allows multiple payment modes, and provides instant confirmation of payment” was realised.

Structure and scope of
BBPS

–
As elaborated by the Giro Advisory Group (GAG) chaired
by Umesh Bellur, the BBPS would comprise two units with distinct functions-

a) The Bharat
Bill Payment Central Unit (BBPCU) will be the single authorised entity
operating the BBPS. The RBI has authorised the National Payments Corporation of India as the BBPCU. Besides
setting operational and business standards for the system and its participants,
NPCI will also carry out clearance and settlement activities.

b) The Bharat
Bill Payment Operating Units (BBPOUs) will be a group of authorised
operational units.  Other participants
include, agents, payment gateways, banks, billers, service providers, authorised
prepaid payment instrument issuers, etc.

–
BBPS would facilitate collection of repetitive
(monthly, bi-monthly, quarterly, etc) payments to utility service providers. The
scope would steadily be extended to include services facilitating the
collection of other types of repetitive payments, including school/university
fees, municipal taxes/payments etc.

Eligibility criteria for
BBPOUs

–
The entity seeking approval should have a net
worth of at least Rs.100 crore as per the last audited balance sheet, which has
to be maintained at all times.

–
The entity should have experience in the field
of bill collection/services to billers, and relevant know-how in transaction
processing for a minimum period of one year.

–
In case of Foreign Direct Investment (FDI) in
the applicant entity, approval from the competent authority as required by the
Department of Industrial Policy and Promotion (DIPP) under the consolidated FDI
policy and regulations framed under the Foreign Exchange Management Act (FEMA),
have to be submitted.

Role of BBPOUs
include:

–
Getting billers and other operating agents on
board.

–
Develop infrastructure (applications) as per standards
set by the BBPCU.

–
As settlement process is integral to an
interoperable payment system, under the BBPS, the BBPOUs’ agents may receive
payments for various billers. Both ON-US transactions (agent who has collected
the payment and the biller who has to be paid, are part of the same BBPOU) and
OFF-US transactions (agent and the biller belong to different BBPOUs).

–
Ensure safety and confidentiality of
transactions, verify biller information, and disclose pertinent information to
customers like fees for use of payment facility.

–
 Redress
customer grievances and settle disputes for billers/agents/end-customers, as
per set procedures.

To get fresh updates on your Facebook & Twitter timelines, subscribe to our pages created specifically for them. We will be posting only those exam specific links on these pages:

Bank PO:

FB: https://www.facebook.com/pagalguybankpo

Twitter: https://twitter.com/PaGaLGuYBankPO

SSC & Other Exams:

FB: https://www.facebook.com/Pagalguy-SSC-CGL-Others-879667042056262/timeline/

Twitter: https://twitter.com/pagalguyssc

UPSC:

Facebook: https://www.facebook.com/Pagalguy-UPSC-951926044840262/timeline/

Twitter:https://twitter.com/PaGaLGuYUPSC