Reserve Bank Of India Constitutes Payments Regulatory Board
The Reserve Bank of India (RBI) has recently established a six-member Payments Regulatory Board (PRB). This new board is designed to oversee and regulate the payment systems across India. The PRB replaces the earlier Board for Regulation and Supervision of Payment and Settlement Systems (BPSS). The change marks step in strengthening the governance and regulatory framework of the country’s digital payment ecosystem.
Composition and Leadership of the Payments Regulatory Board
The PRB is chaired by the RBI Governor Sanjay Malhotra. It includes two other RBI representatives – the Deputy Governor and the Executive Director in charge of Payment and Settlement Systems. Three nominees from the Central government are also members. These government representatives are the Secretary of the Department of Financial Services, the Secretary of the Ministry of Electronics and Information Technology, and Aruna Sundararajan, former Telecom Secretary. This inclusion of government officials is a new feature, giving the government a direct role in payment system oversight.
Legal Authority and Framework
The PRB derives its authority from the Payment and Settlement Systems Act, 2007. This Act provides the legal basis for regulating payment systems in India. The PRB has replaced the BPSS, which was a committee under the RBI’s Central Board but did not include government nominees. The new structure aims to enhance coordination between the RBI and the government in managing payment systems.
Functions and Decision-Making Process
The PRB oversees the functioning of payment systems and is supported by the RBI’s Department of Payment and Settlement Systems (DPSS). The DPSS reports directly to the PRB. Decisions at PRB meetings are taken by a majority vote of members present. In case of a tie, the chairperson or the deputy governor has a casting vote. The board is required to meet at least twice a year. The chairperson can also circulate items for approval outside meetings. The principal legal adviser of the RBI is a permanent invitee to the board meetings.
Significance of Government Representation
The inclusion of government nominees on the PRB marks a shift towards greater government participation in payment system regulation. This is expected to improve policy coordination and align payment system governance with broader national digital and financial strategies. It also reflects the growing importance of digital payments in the economy and the need for a collaborative regulatory approach.
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