RBI prescribes merchant acquisition norms for card transactions
Published: May 01, 2017
By TIOLCORP News Service
MUMBAI, MAY 01, 2017: CO-OPERATIVE banks have been permitted to install both onsite/offsite ATM networks and can issue debit cards on their own or through sponsor banks based on certain eligibility conditions. Also, all co-operative banks have been allowed to enter into credit card business on their own or co-branding arrangement with other banks, subject to fulfillment of the guidelines prescribed by Reserve Bank of India (RBI) in this regard. Keeping in view the need for encouraging digital channels for financial transactions in co-operative banks, RBI has decided that all co-operative banks not intending to act as Point of Sale (POS) acquiring bank are permitted to deploy third party POS terminals without prior approval of RBI subject to the bank fulfilling the following criteria.
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The co-operative bank should be licensed by RBI and CBS compliant;
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The bank's CRAR should not be less than 9% in the preceding financial year;
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The bank should have made a net profit in the preceding financial year;
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The bank's board should consist of at least two professional directors;
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A customer grievance redressal mechanism duly approved by the bank's board should be in place;
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The bank should have a board approved policy on merchant acquisition for card transactions;
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There should not be any restrictions imposed on the bank for accepting deposits/withdrawals by Reserve Bank of India.
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The bank should obtain consent of their merchant customers before offering third party POS terminals and disclose the process of settlement.
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The bank should report to respective Regional Offices of RBI within a month with necessary documents after the operationalization of third party POS terminals.
Also, all co-operative banks intending to act as POS acquiring bank are permitted to deploy their own POS terminals with prior approval of RBI subject to the bank fulfilling certain criteria.
The banks shall comply with instructions and guidelines on Merchant Acquisition for card transactions and POS issued by Department of Payment and Settlement Systems, RBI from time to time. The co-operative banks desirous to deploy their own POS terminals and act as POS acquiring bank may approach the respective Regional Offices of RBI for necessary permission in this regard, with requisite information/documents.
