Context:
The Central Government has notified the Payments Regulatory Board (PRB) Regulations, 2025, introducing a new regulatory body to replace the existing Board for Regulation and Supervision of Payment and Settlement Systems (BPSS). The move marks a significant restructuring of payment system governance in India.
Background
- BPSS was a committee under the RBI’s central board, overseeing regulation and supervision of payment and settlement systems.
- The new entity, PRB, will operate under the framework of the Payment and Settlement Systems Act, 2007, and be supported by the Department of Payment and Settlement Systems (DPSS) of the RBI.
Composition of the PRB
- As per Section 3 of the PSS Act:
- RBI Governor – Chairperson
- RBI Deputy Governor in charge of payment systems – Member
- One RBI officer nominated by the central board – Member
- Three members nominated by the Central Government
- Additional invitees:
- Experts in payments, IT, and law can be invited.
- The Principal Legal Adviser of RBI will be a permanent invitee.
Governance and Voting
- Equal representation from RBI and the Government (3 members each).
- The RBI Governor will hold a casting vote in case of a tie.
Implications and Industry View
- Marks enhanced government role in shaping the payment ecosystem.
- Raises questions on whether the government will appoint bureaucrats or external experts as nominees.
- Industry watching closely for clarity on the nature of appointments.
Historical Context
- In 2018, the RBI opposed the formation of an independent PRB, citing concerns over regulatory autonomy.
Related Developments
- RBI expects lower borrowing rates from digital lenders with the new co-lending norms.
- NPCI enhances UPI oversight to prevent disruptions in digital payments.
