Lightweight Payment and Settlements System

Lightweight Payment and Settlements System

News: The Reserve Bank of India(RBI) has conceptualized a Lightweight Payment and Settlements System.

What is LPSS?
 LPSS aims to ensure that the processing of transactions continues without disruption during catastrophic events such as natural calamities and war.
 The system is expected to keep the liquidity pipeline of the economy alive and ensure economic stability. This system can be operated from anywhere by a bare minimum of staff.
 It will be independent of conventional technologies used for existing payment systems such as RTGS, NEFT, and UPI.

Need:
 According to RBI, existing conventional payment systems such as RTGS, NEFT, and UPI are designed to handle large volumes of transactions while ensuring sustained availability. As a result, they are dependent on complex wired networks backed by advanced IT infrastructure.
 However, catastrophic events like natural calamities and war have the potential to render these payment systems temporarily unavailable by disrupting the underlying information and communication infrastructure. Hence, it is prudent to be prepared to face such extreme and volatile situations. In this context, a Lightweight Payment and Settlement System (LPSS) is being planned.

How will it help?
 The system is expected to operate on minimalistic hardware and software and would be made active only on a need basis. Hence, it would ensure near-zero downtime of the payment and settlement system in the country and keep the liquidity pipeline of the economy alive and intact.
 The system is expected to process transactions that are critical to ensure the stability of the economy, including government and market-related transactions.
Source – RBI website