INVC NEWS
New Delhi — : The Indian government has launched a groundbreaking reform in the country’s payment infrastructure by introducing the Payment Regulatory Board Regulation, 2025, signaling a pivotal shift in the oversight of payment and settlement systems. This new regulation establishes the Payment Regulatory Board (PRB), a body designed to replace the existing Board of Payment and Settlement Systems (BPSS) under the Reserve Bank of India (RBI). The PRB will take charge of regulating and supervising the payment ecosystem, promising increased government involvement and a revamped governance structure to drive greater accountability and efficiency in India’s rapidly evolving digital payments sector.
Under the new regulation, the PRB’s composition aligns with Section 3 of the Payment and Settlement Systems Act (PSS), 2007. The RBI Governor will serve as the chairman of the board, supported by key members including the RBI Deputy Governor responsible for payment systems, an RBI nominee from the Central Board, and three members appointed by the Central Government. This structural redesign reflects a blend of central banking expertise and government representation, aimed at balancing regulatory oversight and strategic direction for India’s payment frameworks.
Supporting the PRB, the Department of Payment and Settlement Systems (DPSS) within the RBI will continue its operational role, ensuring a seamless transition from the BPSS framework to this newly empowered board. This regulatory realignment comes at a critical juncture, as India’s payment landscape witnesses exponential growth in digital transactions, with increasing demand for stronger governance, risk management, and consumer protection.
One notable feature of the PRB is its ability to incorporate experts from diverse domains including payment technology, information technology, and law, thereby enhancing the board’s capacity to address multifaceted challenges in the payment ecosystem. The RBI’s Principal Legal Advisor will hold the status of a permanent invitee, ensuring that legal oversight remains a constant priority during deliberations.
Industry stakeholders have expressed a cautious outlook on the PRB’s formation, emphasizing the potential for increased government influence over payment regulation. A senior industry official noted that the board’s configuration—with three members from the government, three from the RBI, and the governor’s decisive vote—may signal heightened government intervention compared to the previous BPSS structure. This development raises questions about the independence of board members and whether appointments will favor bureaucrats or impartial experts from outside the government machinery.
The government notification also specifies eligibility criteria for nominated members, highlighting that appointees must be under 70 years of age and cannot hold positions as members of Parliament or State Legislatures. This provision aims to maintain professionalism and prevent conflicts of interest within the board’s composition.
The establishment of the Payment Regulatory Board under the new regulation marks a transformative moment for India’s payment governance, setting the stage for stronger oversight amid the nation’s ambitious push towards a cashless economy and digital financial inclusion.
