RBI Payments Regulatory Board 2025 established to regulate Indian payment systems, replacing BPSS. Learn about members, functions, and importance for government exams.
RBI Establishes Payments Regulatory Board to Oversee India’s Payment Systems
On September 30, 2025, the Reserve Bank of India (RBI) constituted a six-member Payments Regulatory Board (PRB) to regulate and supervise the country’s payment systems. This move aims to enhance the governance and oversight of India’s rapidly evolving digital payment ecosystem.
Composition of the Payments Regulatory Board
The PRB is chaired by RBI Governor Sanjay Malhotra. The board’s composition includes:
- RBI Representatives: Deputy Governor and Executive Director in charge of Payment and Settlement Systems.
- Central Government Nominees: Three members from the central government, including:
- Secretary, Department of Financial Services
- Secretary, Ministry of Electronics and Information Technology
- Aruna Sundararajan, former telecom secretary
Additionally, the Principal Legal Adviser of RBI serves as a permanent invitee to the board’s meetings
Replacement of the BPSS
The PRB replaces the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), a committee of the RBI’s Central Board. Unlike the BPSS, the PRB includes government representation, reflecting a more collaborative approach to overseeing India’s payment systems
Functions and Objectives
The PRB’s primary responsibilities include:
- Regulating and supervising payment systems under the Payment and Settlement Systems Act, 2007.
- Ensuring the safety and efficiency of payment systems.
- Promoting innovation and competition in the payment sector.
- Addressing emerging challenges and risks in the digital payment landscape.
By establishing the PRB, the RBI aims to strengthen the regulatory framework governing India’s payment systems, ensuring they remain secure, efficient, and inclusive.
Why This News Is Important
Strengthening Oversight of Digital Payments
The establishment of the Payments Regulatory Board (PRB) underscores the Reserve Bank of India’s commitment to enhancing the oversight of India’s rapidly growing digital payment ecosystem. By including government nominees, the PRB fosters a more collaborative approach to regulation, ensuring that the interests of all stakeholders are considered.
Replacing the BPSS
The PRB replaces the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), a committee of the RBI’s Central Board. The inclusion of government representatives in the PRB marks a significant shift towards a more inclusive and transparent regulatory framework.
Addressing Emerging Challenges
As digital payments continue to evolve, the PRB is tasked with addressing emerging challenges and risks. Its mandate includes promoting innovation, ensuring security, and fostering competition, all of which are crucial for maintaining the integrity and efficiency of India’s payment systems.
Implications for Stakeholders
For students preparing for government exams, understanding the formation and functions of the PRB is essential. It reflects the government’s proactive approach to regulating the financial sector and highlights the importance of governance and policy-making in shaping India’s economic landscape.
Historical Context: Evolution of Payment System Regulation in India
The regulation of payment systems in India has undergone significant transformations over the years. Initially, the Reserve Bank of India (RBI) operated as the sole authority overseeing payment systems. However, with the rapid growth of digital payments and the emergence of new technologies, there was a need for a more structured and inclusive regulatory framework.
In 2007, the Payment and Settlement Systems Act was enacted, providing the legal foundation for the regulation of payment systems in India. Subsequently, the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) was established as a committee of the RBI’s Central Board to oversee the functioning of payment systems.
Recognizing the need for a more collaborative approach, the RBI has now constituted the Payments Regulatory Board (PRB), replacing the BPSS. This move aligns with global best practices and reflects India’s commitment to fostering a secure and efficient digital payment ecosystem.
Key Takeaways from “RBI Establishes Payments Regulatory Board”
| No. | Key Takeaway |
|---|---|
| 1. | The RBI has constituted a six-member Payments Regulatory Board (PRB) to oversee India’s payment systems. |
| 2. | The PRB includes three central government nominees, marking a shift towards a more collaborative regulatory approach. |
| 3. | The PRB replaces the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS). |
| 4. | The board’s primary responsibilities include regulating payment systems, ensuring security, and promoting innovation. |
| 5. | Understanding the formation and functions of the PRB is crucial for students preparing for government exams. |
FAQs: Frequently Asked Questions
1. What is the Payments Regulatory Board (PRB) of RBI?
The Payments Regulatory Board (PRB) is a six-member board constituted by the Reserve Bank of India (RBI) to regulate and supervise India’s payment systems, replacing the earlier BPSS committee.
2. Who are the members of the Payments Regulatory Board?
The PRB is chaired by the RBI Governor and includes:
- RBI representatives (Deputy Governor and Executive Director of Payment and Settlement Systems)
- Three central government nominees, including Secretaries of Financial Services, Electronics & IT, and Aruna Sundararajan.
- Principal Legal Adviser of RBI as a permanent invitee.
3. Which board did the PRB replace?
The PRB replaced the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), which was earlier part of the RBI’s Central Board.
4. What are the main functions of the PRB?
The PRB regulates payment systems, ensures safety and efficiency, promotes innovation and competition, and addresses emerging risks in the digital payment sector.
5. Why was the PRB formed by the RBI?
The PRB was formed to strengthen oversight of India’s digital payment ecosystem, improve governance, and introduce a collaborative framework involving both the RBI and central government representatives.
6. Under which act does the PRB operate?
The PRB operates under the Payment and Settlement Systems Act, 2007, which provides the legal foundation for regulating India’s payment systems.
7. How is the PRB relevant for government exam aspirants?
Students preparing for exams like SSC, banking, railways, and civil services must understand the PRB as it reflects policy changes, financial governance, and regulatory frameworks critical for current affairs sections.
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