India has the fifth largest railway network in the world which is managed and operated by the Ministry of Railways, Government of India (MOR). The MOR manages and operates the trains on the Indian Railway (IR) network. Till now, the Indian Railway Catering and Tourism Corporation Limited (IRCTC), a Government of India owned listed entity, was the only private entity (although owned by the Government) permitted to operate passenger trains on select routes. Despite the size of the IR network, there is a huge unmet demand due to capacity constraints which often leads to loss of passenger business to other modes of transport.

The enactment of the Payments and Settlement Systems Act, 2007 (PSS Act), was a laudable and farsighted move as it not only created a regulatory framework for payment and settlement systems, but also provided guidelines to foster the growth of such systems. The PSS Act designated the Reserve Bank of India (RBI) as the regulatory and supervisory authority, and sections 30 and 31 of the PSS Act enable the RBI to impose penalties and compound offences, respectively.