RBI establishes Payment Regulatory Board (PRB)

Why in news ?

• The Reserve Bank of India (RBI) has constituted the Payment Regulatory Board (PRB) to regulate and supervise India’s evolving digital payments ecosystem.
• The PRB will replace the earlier BPSS (Board for Regulation and Supervision of Payment and Settlement Systems).
• Objective: To ensure transparency, efficiency, and security in domestic and cross-border payment systems.
• This step has been taken in view of the rapid expansion of digital payments and the need for more focused oversight.

Legal Basis and Structural Changes

• The PRB derives its powers from the Payment and Settlement Systems Act, 2007.
• It is no longer a sub-committee of the RBI Central Board but a separate unit supported by DPSS (Department of Payment and Settlement Systems).
• The PRB represents a more autonomous and robust regulatory framework, aligned with India’s global ambitions in digital payments.

Objectives:

• Ensuring security
• Maintaining interoperability
• Building a flexible and reliable digital payments ecosystem

Structure:

• Chairperson: RBI Governor (current – Sanjay Malhotra)
• Total Members: 6 (including 5 others)
• RBI Members:
  • Deputy Governor in charge of Payment Systems
  • Executive Director responsible for Payment Systems
• Government-Nominated Members:
  • Financial Services Secretary
  • Electronics & IT Secretary
  • Aruna Sundararajan, former Telecom Secretary

Goal: To integrate technical, financial, and policy perspectives and remain responsive to emerging challenges.

Decision-Making Rules:

• Decisions are taken by majority vote.
• In case of a tie, the Chairperson (or Deputy Governor) has the casting vote.
• At least two meetings are held annually.
• Decisions can also be taken via circulation with the Chairperson’s approval.
• RBI’s Chief Legal Advisor will act as a permanent invited member to ensure legal compliance.

Key Functions:

The PRB is tasked with comprehensive regulation and supervision of all payment systems, including:

1. Electronic Payments:
   • UPI, NEFT, RTGS, IMPS, card networks
2. Non-Electronic Payments:
   • Cheque clearing system
3. Domestic and Cross-Border Transactions
4. Public and Private Payment Platforms