The Reserve Bank of India: The Reserve Bank of India (RBI) has constituted a six-member Payments Regulatory Board (PRB) to oversee India’s payment systems. This Board will be the highest policy making body for regulation and supervision of payment systems in India.
About the Payments Regulatory Board (PRB):
- The Payments Regulatory Board has been established in view of the rapid expansion of the digital payments sector and the need for more focused monitoring.
- It will replace the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS).
- This authority derives its powers from the Payment and Settlement Systems Act, 2007. It empowers the RBI to regulate payment systems in India. It is only the RBI or a person authorized by the RBI that can operate a payment system in India.
- It is supported by the RBI’s Department of Payment and Settlement Systems (DPSS), which reports directly to the PRB.
- It allows RBI to license and authorise operators such as Clearing Corporation of India Limited (CCIL), National Payments Corporation of India (NPCI) card networks, ATM networks and others.
- Its objective is to ensure transparency in domestic and cross-border payment systems and to improve the efficiency and security of payment systems.
Composition:
- It is chaired by the RBI Governor.
- It comprises two RBI officials: the Deputy Governor and the Executive Director of Payment Systems.
- Three nominated members from the Central Government: Secretary of Financial Services, Electronics and Information Technology and former Secretary of Telecommunications.
- Decisions are taken by majority vote; in the event of a tie, the Chairman or Deputy Governor has the casting vote.
- The Principal Legal Advisor of the RBI is a permanent invitee. Additionally, experts may be invited as permanent or ad hoc invitees.
- Meetings should be held at least twice a year; decisions can also be taken through circulation.
Functions:
- The Payments Regulatory Board acts as the apex policy-making body for payment systems in India.
- Regulates and supervises all payment systems such as electronic, non-electronic, domestic and cross-border etc.
Payment and Settlement Systems in India:
- Payment systems in India are regulated under the Payment and Settlement Act, 2007.
There are the following types of payment systems –
- Paper-based: cheques, drafts, banker’s cheques, etc.
- Electronic-based: Electronic Funds Transfer (EFT), National Electronic Funds Transfer (NEFT), Real-Time Gross Settlement (RTGS), Unified Payments Interface (UPI), etc.
- Others: e-wallets, ATMs, point-of-sale terminals, debit/credit cards, etc.