Payment Regulatory Board (PRB)

The Payment Regulatory Board (PRB) refers to a proposed statutory body envisaged to regulate and supervise payment systems in India. The concept of the PRB emerged from policy discussions aimed at strengthening governance, transparency, and specialised oversight of the rapidly expanding payments ecosystem. In the context of Indian banking, finance, and the economy, the PRB represents an institutional reform proposal intended to separate payment system regulation from broader central banking functions, while still preserving financial stability and public interest.
Although the PRB has been discussed at the policy level, payment system regulation in India currently continues under the authority of the Reserve Bank of India. Nevertheless, the idea of a Payment Regulatory Board remains important for understanding the evolving regulatory architecture of India’s digital payments landscape.

Background and rationale for the Payment Regulatory Board

India’s payment systems have undergone rapid transformation, marked by the growth of electronic fund transfers, card payments, real-time retail payment systems, and fintech-led innovations. This expansion has increased the complexity, scale, and systemic importance of payment infrastructures.
The proposal for a Payment Regulatory Board was motivated by the need for a dedicated regulatory body with specialised focus on payments, distinct from traditional monetary policy and banking regulation. Proponents argued that such separation would allow sharper attention to innovation, competition, consumer protection, and operational resilience in payment systems.

Concept and proposed structure of the PRB

The Payment Regulatory Board was envisaged as an independent statutory authority responsible for authorisation, regulation, and supervision of payment systems. While details varied across policy drafts, the core idea was to vest regulatory powers in a board with representation from the central bank, the government, and independent experts.
Under the proposed framework, the PRB would have assumed responsibility for licensing payment system operators, issuing regulations, setting technical and security standards, and overseeing compliance, while coordinating closely with the central bank on systemic risk matters.

Relationship with the Reserve Bank of India

A central issue in discussions around the PRB was its relationship with the Reserve Bank of India. The RBI has historically regulated payment systems under statutory powers and has emphasised the close link between payments, monetary policy transmission, and financial stability.
Concerns were raised that separating payment system regulation from the RBI could weaken systemic oversight, as payment systems are integral to liquidity management, settlement finality, and confidence in the financial system. As a result, the RBI has continued to play the primary regulatory role in payments, with policy preference for unified oversight.

Relevance to banking and financial institutions

For banks and financial institutions, the proposed PRB signalled potential changes in regulatory engagement, compliance processes, and governance expectations. A specialised payments regulator could have introduced more focused supervision, tailored norms, and innovation-friendly regulatory approaches.
At the same time, banks have a strong interest in regulatory certainty and systemic stability. Any shift in regulatory authority would require careful coordination to avoid overlaps, gaps, or conflicting directives affecting payment operations.

Implications for payment service providers and fintechs

Payment service providers, fintech companies, and non-bank entities are major stakeholders in the discussion around the PRB. A dedicated payments regulator was seen as a possible avenue for faster approvals, clearer guidelines, and a regulatory environment more attuned to technological innovation.
However, fintech regulation also intersects with issues of consumer protection, data security, and financial stability, reinforcing the importance of close alignment with central banking oversight.

Significance for the Indian economy

At a macroeconomic level, effective regulation of payment systems is essential for economic efficiency, financial inclusion, and trust in digital transactions. The PRB proposal reflects India’s recognition of payments as critical public infrastructure supporting commerce, government transfers, and everyday economic activity.
Debates around the PRB underscore the need to balance innovation and competition with safety, resilience, and systemic oversight in a fast-growing digital economy.

Policy debates and current status

The proposal for a Payment Regulatory Board has been subject to extensive policy debate involving the government, the RBI, financial institutions, and industry participants. Key issues include institutional independence, accountability, coordination with monetary policy, and crisis management.
As of now, payment system regulation continues to be exercised by the RBI under the existing legal framework. Nevertheless, discussions around the PRB have influenced regulatory thinking and contributed to ongoing refinements in payment system governance.