The RBI’s new guidelines for cross-border payments require all fintech companies to apply for a Payment Aggregator-Cross Border (PA-CB) license. This is a significant change, as previously fintech companies could rely on their sponsor bank or authorized dealer (AD) to manage their payment accounts.
The new guidelines are likely to push up compliance costs for fintechs, but they are also expected to lead to a more competitive and innovative sector. Fintech firms may attract more investment and offer additional services to exporters and importers, while smaller entities may need to rework their business models or collaborate with established players.
Non-banks that provide PA-CB services must apply to the RBI for authorization by April 30, 2024. They can continue to operate in the interim. The RBI has divided the approval process into three categories: export-only PA-CB, import-only PA-CB, and import and export PA-CB.
Non-banks that were already providing PA-CB services as of the date of the circular must have a minimum net worth of ₹15 crore at the time of submitting an application. They must further increase their net worth to a minimum of ₹25 crore by March 31, 2026. New entities that have not started their operations must also have a minimum net worth of ₹15 crore at the time of submitting an application. They have three financial years to attain a minimum net worth of ₹25 crore from the grant of authorization.