The RBI is expected to explore extending the deadline for tokenization rules. However, no final decision has been made.
The Indian Banks' Association, a lobbying group for banks, has previously requested an extension of the tokenization deadline from the RBI. Aside from that, other banks have asked the regulator to request an extension.
According to two people familiar with the situation, the Reserve Bank of India (RBI) is likely to extend the deadline for new tokenisation guidelines due to concerns voiced by different stakeholders about reaching the December 31 deadline.
One of the individuals mentioned above stated, "The RBI may extend it for 3–4 months so that the system can prepare better to avoid a massive disruption."
However, according to the individuals listed above, no final decision has been made on this.
The Indian Banks' Association (IBA), a bank lobbying group, had previously requested an extension of the tokenization deadline from the RBI. Aside from that, other banks have asked the regulator to request an extension.
"Banks are prepared," said the second individual, "but the issue is with other stakeholders, primarily small and mid-sized merchants."
Tokenisation is the process of replacing credit and debit card information with an equivalent code known as a "token." Each card, token requestor, and gadget has its token. The token requestor is the entity that receives a customer's request for card tokenisation and forwards it to the card network for the issuance of a matching token.
Because the card data is not shared with the merchant during transaction processing, a tokenised card transaction is deemed safer. The cardholder can have his or her card tokenized by submitting a request using the token requestor's app.
The token requestor will send the request to the card network, which will issue a token corresponding to the card, the token requestor, and the device, with the card issuer's permission.
The RBI has previously requested that banks assess their degree of readiness at the entity level. According to people familiar with the situation, the central bank has sought out banks in recent weeks to guarantee a seamless transition.
"The RBI wants banks to ensure the banking system is prepared for the new rules. The regulator is in touch with most banks on this subject," said a senior official at a private-sector bank, on condition of anonymity.
While banks and payment networks are confident in their ability to satisfy the new standards, businesses are not. During conversations with the RBI, banks cautioned the regulator of potential disruption, citing the need for extra time for small businesses to adjust to the significant change.