Latest news with #PaymentsRegulatoryBoard
Hindustan Times
6 days ago
- Business
- Hindustan Times
New Payments Regulatory Board can rewrite digital payment rules
The ink is still fresh on the formation of the Payments Regulatory Board (PRB)—a structural shift in how India governs its fast-growing digital payments ecosystem. Replacing the earlier Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), the PRB introduces joint oversight by the Reserve Bank of India (RBI) and the central government, marking the first-time regulatory authority over a core financial infrastructure is shared at the top. UPI(MINT) India's regulatory journey has evolved alongside its digital payments growth. The Banking Regulation Act of 1949 laid the groundwork, while the Payment and Settlement Systems Act of 2007 granted the RBI direct oversight of payment systems. However, mass adoption of innovations like UPI, Aadhaar-enabled payments, and prepaid payment instruments (PPIs) has introduced new challenges around interoperability, fragmented oversight and the need for faster policy responses. The PRB builds on a legacy of robust governance—consumer protection through grievance redressal and KYC guidelines, resilience via cybersecurity frameworks, and risk oversight. In 2018, the RBI had emphasised the need to maintain continuity and technical expertise. That thinking has shaped the PRB's current 3+3 composition—three RBI nominees and three government appointees. The PRB aligns with India's broader payments vision of financial inclusion, innovation and risk management. India accounted for nearly half of global real-time digital payment transactions in 2024. As transaction volumes grow, risks evolve—from infrastructure strain to emerging security threats. The PRB's hybrid model offers agility, allowing innovation and safeguards to advance in tandem. Banks and payment networks face evolving compliance demands around tokenised payments, AI-driven fraud detection and digital currency pilots. FinTech firms can expect a participatory regulatory environment with clearer roadmaps for blockchain, programmable payments and cross-border innovations. The growing instances of UPI frauds have also been an area of concern, which clearly requires a differentiated approach to address the systemic risks being created. The PRB is expected to include technical experts in cybersecurity, data privacy and digital law—either as members or invitees. This is critical for tackling operational challenges like UPI outages, infrastructure bottlenecks and long-term systemic disruptions. In a move towards more inclusive policymaking, the board may engage external experts from sectors like telecom, e-commerce and retail. This wider representation—through ad hoc industry invitees—can strengthen alignment with sectoral priorities and promote a future-ready regulatory approach. Rules around prepaid instruments, QR code standards and merchant onboarding are also likely to be revised to strike a balance between innovation and consumer protection. Globally, Australia's Payments System Board offers a useful comparison—where the central bank chairs the board and the government appoints external members. India's PRB similarly blends public sector accountability with broader inputs from the private sector. As a result, policy discussions such as revisiting the MDR regime for large merchants or scaling the New Umbrella Entity (NUE) could gain renewed momentum. RBI's Digital Payments Index (DPI) reached 465.33 in September 2024, reflecting the expanding reach, adoption and quality of digital payment services across India. The PRB's creation is not just a response to this scale—it is a forward-looking move to reinforce the core of India's digital finance ecosystem. It is expected to accelerate policy decisions, support cash displacement efforts and continue the BPSS's push to enhance interoperability and mandate more open systems—offering consumers greater choice while evaluating the long-term sustainability of players, including those in the UPI ecosystem. Designed as both a regulator and a platform for collaboration, the PRB promotes trust—not just more transactions. Its consultative approach supports a model built for ambition, adaptability and inclusive growth. With joint oversight from the Reserve Bank of India and the central government, the PRB is expected to foster greater policy alignment—encouraging innovation while managing systemic risk. Banks and payment networks may adapt their compliance frameworks to better accommodate emerging payment modes and technologies. FinTech firms could benefit from clearer regulatory pathways in areas such as cryptocurrencies, tokenised assets and blockchain-based payments. Foreign players entering India's payments market may also gain enhanced regulatory clarity. Alternative modes of payments acceptance—be it through wearables or newer form factors like 'face' payments or palm payments—might also get a boost, helping drive innovation, provide additional security layers and bring wider choices to consumers. In the near term, the PRB may look to revise regulations around QR code-based merchant acceptance and prepaid payment instruments—strengthening consumer protection while preserving the rapid pace of innovation that defines India's digital payments landscape. This article is authored by Ranadurjay Talukdar, partner and payments sector leader, EY India.
Mint
27-05-2025
- Business
- Mint
Govt gets a seat on India's new payments regulator. Here's why
Mumbai: India's decision to establish a new regulatory board with government representation reflects the desire to manage and control the critical digital public infrastructure, including the Unified Payments Interface (UPI) that accounts for nearly 80% of all cashless transactions, according to industry experts. Last week, the government notified rules to set up a Payments Regulatory Board, replacing the existing Board for Regulation and Supervision of Payment and Settlement System. It will be chaired by the Reserve Bank of India (RBI) governor, and will have two other RBI members. The central government will nominate three representatives. Also Read | How India pays online: UPI leads with 65% share, EMIs make up 20%—in charts 'UPI is a digital public infrastructure like Aadhaar. We're talking about the payments infrastructure in the country, which is a national critical asset," said Vivek Mandhata, managing director and partner, Boston Consultancy Group (BCG). 'So the government and regulator together have to define the path, and that's probably the intention why this kind of a committee structure is being set up." The UPI platform processed a record 186 billion transactions worth ₹261 trillion in FY25. Monthly transaction volumes touched a high of 18.3 billion in March 2025, amounting to ₹ 24.8 trillion—up 36% on-year by volume and 25% by value, Mint had reported on 4 April. According to the latest data by the National Payments Corporation of India (NPCI), the numbers moderated to 17.9 billion transactions worth ₹23.9 trillion in April. Also Read | RBI gives final approval to PayU for online payment aggregator UPI charges The government has been footing a large part of the bill for digital payments as it hands out UPI-related incentives. 'UPI is a national crown jewel, and the government wants to control it as much as RBI needs to. And this tussle has been going on for a while now," a senior industry executive said on the condition of anonymity. "Every time UPI goes down for even 30 minutes, it's crisis mode. And at that scale, the government looks at this as a very important asset to monitor and manage," the executive said. 'It's been 2-3 years now since there's been a push to bring proper economics into the UPI ecosystem. But the holding back is happening through the Centre because they don't want this jewel to get any tarnish at this point." Ranadurjay Talukdar, partner and payments sector leader at EY India, said growing discussions around making UPI chargeable have warranted the need to acknowledge industry voices. Also Read | Mint Explainer: UPI Circle's vast potential beyond family and friends 'It has become almost a political necessity now with the finance ministry needing to step in to clarify every time there is talk of making UPI payments chargeable," he said. "Even so, it is the banks that have been incurring a bulk of the cost, spending crores for digital infrastructure upgrade and upkeep to keep up with the growth in UPI transaction volumes. However, they have made little in terms of UPI revenue," Talukdar said. 'A lot of it has been thrust down upon the Indian financial services sector by the government and the RBI, and this might finally be an opportunity for banks to actually also be heard in this in this whole bargain," he said, adding that this would include examining what is sustainable such as in terms of physical KYC (know your customer) of merchants. Strategic needs The need for government representation may have also been driven by the need to supervise how money flows in and out of the country. Given that the government and the regulator then have equal stake in policy-making, it would make sense for them to come together for more transparent decision-making rather than one party first formulating the policies and then influencing the other, say experts. Rahul Jain, chief financial officer at NTT Data Payment Services India, cited the example of the Mahadev betting app case. Such incidents have warranted the need for the government to monitor money going out of the country. 'The government viewpoint seems to define a certain unified methodology so that people don't have to struggle with multiple departments and processes," Jain said, adding that this would also allow much better coordination between government agencies and RBI because there are still a lot of moving parts such as the legal or cyber security aspects which the RBI cannot address itself independently, being a regulator. The creation of the Payments Regulatory Board has been in discussions since 2017 when an inter-ministerial committee recommended setting up an independent regulator for payments-related matters, chaired by a government representative. The RBI had written back to the government in October 2018, advocating that regulations remain within the central bank. The apex bank had then recommended setting up a Payments Regulatory Board headed by the RBI governor with a casting vote, and the government may nominate three members. The government has now notified the 'Payments Regulatory Board Regulations, 2025 to set up the new regulator. "RBI is still going to be in the driver's seat, in terms of policy setting. They just have the opinion of other stakeholders coming into the process more formally," BCG's Mandhata said, adding that there is an urge to simplify and strengthen the overall payments ecosystem. In the current environment, payments is a critical 'nerve centre" to control and maintain independence from a geopolitical stability standpoint, according to Mandhata. The government would want to have an overview on the work being done on cross-border payments, including UPI going international and anti-money laundering, which will influence some strategic priorities of the nation, he said, adding that collaboration in this regard would help speed up the pace of change or response in terms of policy and regulation making. EY's Talukdar believes government representation could lead to more uniform policies on aspects such as cryptocurrency, gaming platforms, treatment of foreign operators, and the entry of social media platforms such as WhatsApp and X into the payments space. "If this is a success, there may be areas like digital lending, which is another sensitive area, or MSME lending, where the government could play a role in deciding the course of future policy-making." Beyond RBI's scope Some believe the RBI's role is limited in terms of regulating fintechs and payments platforms, whereas the government might offer a more holistic approach in the regulation of the digital public infrastructure. 'The government has a much bigger plan on the digital public infrastructure front. It is designing a lot of products such as ONDC, Unified Energy Interface (UEI), and the one thing on their agenda is how to bring interoperability in many of the aspects," NTT Data's Jain said. 'And there is a big incentive for the government because they don't want the economy to move back towards a cash economy, so they want to be involved as much in influencing that policy," he said. The expanded scope of the board is also expected to include a focus on issues such as finding solutions for increasing cases of cyber fraud, customer grievance redressal and on growing homegrown networks such as UPI and the RuPay card network. 'Another growing area of discussion has been CBDCs (central bank digital currencies)," said EY India's Talukdar. 'Given all that is happening, there would definitely be an imperative or greater push for CBDC interoperability across countries, which is a much bigger agenda for the government than the RBI because it directly impacts trade and reliance on the US dollar."
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Business Standard
23-05-2025
- Business
- Business Standard
Six-member board to regulate payment systems: RBI notification
RBI governor headed a six-member Payments Regulatory Board, including three central government nominees, will regulate and supervise payment systems in the country, according to a central bank notification. The Payments Regulatory Board (PRB) will replace the Board for Regulation and Supervision of Payment and Settlement System (BPSS). The five-member BPSS is also headed by the RBI Governor but does not include any government nominee. The other members are a deputy government concerned and three directors from the Central Board of the Reserve Bank of India. The Reserve Bank has now notified 'Payments Regulatory Board Regulations, 2025'. According to the notification, other members of the governor-headed Payments Regulatory Board (PRB) will be the Deputy Governor in charge of the Payment and Settlement Systems, one officer of the RBI to be nominated by the Central Board, and three persons nominated by the central government. RBI Governor, Deputy Governor and the central bank official will function as "ex officio" members of the Board. It further said the PRB may invite persons with experience in the fields of payment and settlement systems, information technology, and law to attend its meeting either as permanent or ad hoc invitees and the Principal Legal Adviser of the RBI shall be a permanent invitee to the meetings. The Payments Regulatory Board shall ordinarily meet at least twice a year, the notification said. Earlier, the government had set up an inter-ministerial committee headed by the economic affairs secretary to finalise amendments to the Payment and Settlement Systems Act, 2007. In its draft report, the panel suggested the creation of an independent regulator Payments Regulatory Board to deal with payments-related issues. The Reserve Bank of India, in October 2018, released its 'Dissent Note' on the Inter-Ministerial Committee for the finalisation of Amendments to the Payment and Settlement Systems Act, objecting to the panel's recommendation of having a regulator for payment systems outside the RBI. "The Payments Regulatory Board (PRB) must remain with the Reserve Bank and be headed by the Governor, Reserve Bank of India. It may comprise 3 members nominated by the Government and RBI, respectively, with a casting vote for the Governor to ensure smooth operations of the Board. The composition of the PRB is also not in conformity with the announcements made in the Finance Bill by the Honourable Finance Minister," the RBI's 'Dissent Note' had said. According to the notification, each member of the Board shall have one vote. "All matters for approval which come up during any meeting of the Board shall be decided by a majority of votes of the Members present and voting, and in the event of an equality of votes, the Chairperson, or in his absence, the Deputy Governor, who is a Member of the Board, shall have a second or casting vote," said the notification published on May 21 in The Gazette of India. Commenting on the notification, Ranadurjay Talukdar, Partner and Payments Sector Leader, EY India said: "India has never seen payments regulated outside of the RBI. RBI oversight over the years has ensured stringent governance of systemic risks arising from the payments ecosystem -- setting up appropriate guardrails to protect consumer interests (such as grievance redressal and KYC guidelines) and infrastructural resilience (such as the cybersecurity framework for PSOs)". However, the establishment of a PRB with the right industry representation can lead to greater innovation; whether by expanding tokenisation to enable device-based payments across schemes or by introducing newer entities like NUEs to balance ever-growing digital payments volumes, Talukdar said. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Time of India
23-05-2025
- Business
- Time of India
Six-member board to regulate payment systems: RBI notification
RBI governor headed a six-member Payments Regulatory Board, including three central government nominees, will regulate and supervise payment systems in the country, according to a central bank notification. The Payments Regulatory Board (PRB) will replace the Board for Regulation and Supervision of Payment and Settlement System (BPSS). The five-member BPSS is also headed by the RBI Governor but does not include any government nominee. The other members are a deputy government concerned and three directors from the Central Board of the Reserve Bank of India . The Reserve Bank has now notified 'Payments Regulatory Board Regulations, 2025'. According to the notification, other members of the governor-headed Payments Regulatory Board (PRB) will be the Deputy Governor in charge of the Payment and Settlement Systems, one officer of the RBI to be nominated by the Central Board, and three persons nominated by the central government. RBI Governor, Deputy Governor and the central bank official will function as "ex officio" members of the Board. Live Events It further said the PRB may invite persons with experience in the fields of payment and settlement systems, information technology, and law to attend its meeting either as permanent or ad hoc invitees and the Principal Legal Adviser of the RBI shall be a permanent invitee to the meetings. The Payments Regulatory Board shall ordinarily meet at least twice a year, the notification said. Earlier, the government had set up an inter-ministerial committee headed by the economic affairs secretary to finalise amendments to the Payment and Settlement Systems Act, 2007. In its draft report, the panel suggested the creation of an independent regulator Payments Regulatory Board to deal with payments-related issues. The Reserve Bank of India, in October 2018, released its ' Dissent Note ' on the Inter-Ministerial Committee for the finalisation of Amendments to the Payment and Settlement Systems Act, objecting to the panel's recommendation of having a regulator for payment systems outside the RBI. "The Payments Regulatory Board (PRB) must remain with the Reserve Bank and be headed by the Governor, Reserve Bank of India. It may comprise 3 members nominated by the Government and RBI, respectively, with a casting vote for the Governor to ensure smooth operations of the Board. The composition of the PRB is also not in conformity with the announcements made in the Finance Bill by the Honourable Finance Minister," the RBI's 'Dissent Note' had said. According to the notification, each member of the Board shall have one vote. "All matters for approval which come up during any meeting of the Board shall be decided by a majority of votes of the Members present and voting, and in the event of an equality of votes, the Chairperson, or in his absence, the Deputy Governor, who is a Member of the Board, shall have a second or casting vote," said the notification published on May 21 in The Gazette of India. Commenting on the notification, Ranadurjay Talukdar, Partner and Payments Sector Leader, EY India said: "India has never seen payments regulated outside of the RBI. RBI oversight over the years has ensured stringent governance of systemic risks arising from the payments ecosystem -- setting up appropriate guardrails to protect consumer interests (such as grievance redressal and KYC guidelines) and infrastructural resilience (such as the cybersecurity framework for PSOs)". However, the establishment of a PRB with the right industry representation can lead to greater innovation; whether by expanding tokenisation to enable device-based payments across schemes or by introducing newer entities like NUEs to balance ever-growing digital payments volumes, Talukdar said.
