Govt to have bigger say in new payments regulatory board

-

In a significant reform of the country's payments infrastructure, the central government has introduced the Payments Regulatory Board Regulations, 2025. This sets the stage for the formation of a new entity called the Payments Regulatory Board (PRB), which will have considerable representation from the government.

The PRB is designed to replace the existing Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), a committee that currently operates under the Reserve Bank of India (RBI), as reported by Business Standard.

The BPSS functions as a sub-committee of the RBI's central board and is responsible for overseeing payment and settlement systems. Under the new framework, the PRB will take on these responsibilities, while the Department of Payment and Settlement Systems (DPSS), a division within the RBI, will act as its secretariat.

According to a government notification dated May 21, the PRB's composition will follow the provisions outlined in Section 3 of the Payment and Settlement Systems Act, 2007. The board will be chaired by the RBI Governor and will include the Deputy Governor responsible for payment systems, along with another officer nominated by the RBI. Additionally, three members will be appointed by the central government.

The regulations also permit the board to invite subject matter experts—ranging from fields such as payment systems, information technology, and law—to participate in its meetings. The Principal Legal Adviser to the RBI will be a permanent invitee.

The Business Standard report quoting an industry executive said, "From my perspective, there will be three nominees from the government and three from the RBI, with the governor holding a casting vote. With this shift, the government will play a significant role in the payment ecosystem. It will be interesting to see if they appoint secretaries or independent experts from outside."

This regulatory change marks a new phase in the governance of India's rapidly evolving digital payments landscape, reflecting broader efforts to balance regulatory oversight between the central bank and the government.