The Reserve Bank of India (RBI) has notified the change in definition of ‘net worth’ for entities authorised under the Payment and Settlement Systems Act

An entity operating a payment system within the country has to obtain authorisation from the RBI. The RBI has from time to time issued guidelines in respect of the eligibility criteria for authorisation of payment system operators, including Pre-Paid Instrument(PPI) issuers, overseas principals for money transfer service scheme and card network operators, among others.

These entities have to comply with the requirements of minimum paid-up capital and net-worth, as applicable.

The RBI has via its notification, clarified how net worth shall be computed under the Payment and Settlement Systems Act.

The notification reads “To have uniformity and clarity in respect of the computation of net worth for an entity authorised under the Payment and Settlement Systems Act, it is advised that net worth will consist of paid-up equity capital, free reserves, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of assets, but not reserves created by revaluation of assets’ adjusted for ‘accumulated loss balance, book value of intangible assets and Deferred Revenue Expenditure, if any.”

January 16th, 2015