RBI announces new Payments Regulatory Board: How will it work?
What's the story
The Reserve Bank of India (RBI) has announced the formation of a six-member Payments Regulatory Board (PRB). The board will oversee and regulate the country's payment systems.
The new entity will replace the existing Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), which is also headed by the RBI Governor but doesn't have government nominees.
Board structure
Composition and regulations of the new board
The RBI Governor will head the PRB, serving as its Chairperson.
The PRB will also have three central government representatives, an RBI Deputy Governor (in charge of payment systems), and one RBI official nominated by the central board.
The RBI Governor, Deputy Governor, and the nominated RBI officer will be ex-officio members of the new board.
Expert participation
Expert involvement in PRB meetings
The RBI has now introduced the 'Payments Regulatory Board Regulations, 2025,' which require the PRB to meet at least twice a year.
PRB may invite experts from different fields, like payment and settlement systems, IT, and law, to its meetings.
These experts can be invited as permanent or ad-hoc invitees. The Principal Legal Advisor of the RBI will be a permanent invitee to these meetings.
This move is aimed at bringing diverse perspectives into the board's discussions and decisions.
Regulatory proposal
Government's proposal for independent regulator and RBI's stance
In 2018, the government suggested an independent regulator via an inter-ministerial committee headed by the Economic Affairs Secretary, to finalise amendments to the Payment and Settlement Systems Act of 2007.
However, RBI opposed the idea and issued a 'Dissent Note' insisting that the PRB should remain with them.
The note read, "The Payments Regulatory Board (PRB) must remain with the Reserve Bank and be headed by the Governor, RBI."
It also pointed inconsistencies in PRB composition with Finance Bill announcements.
Voting procedure
Decision-making process of the PRB
As per the RBI's notification dated May 21 in The Gazette of India, every member of the PRB will have one vote. Decisions will be taken by majority vote.
In case of a tie, either the Chairperson or, in their absence, the Deputy Governor who is also a Member of the Board, shall have a second or casting vote.
This ensures every decision taken by the board is equally represented and considered by all members involved.