RBI Notifies New Six-Member Payments Regulatory Board Including Government Nominees

On May 21, 2025, the Reserve Bank of India (RBI) officially notified the establishment of a new Payments Regulatory Board (PRB), a six-member body tasked with regulating and supervising payment systems in India. This new board replaces the earlier Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) and notably includes, for the first time, three nominees from the central government. The PRB will be chaired by the RBI Governor, reflecting the central bank’s continued leadership role in the payments ecosystem.

Why in News?

The RBI’s notification of the Payments Regulatory Board comes at a time when digital payments and the payment ecosystem in India are undergoing rapid transformation. The formation of the PRB aims to provide stronger regulatory oversight and inclusive governance by incorporating government nominees alongside RBI officials. This move resolves long-standing debates over the governance structure of payments regulation in India and aligns with efforts to streamline payment supervision in an increasingly digitized economy.

Aim

• To regulate and supervise payment systems in India through an empowered, structured regulatory body.

Objectives

• Ensure efficient functioning and oversight of payment and settlement systems.
• Provide a unified governance structure with participation from RBI and government nominees.
• Foster trust, security, and innovation within India’s payment ecosystem.
• Facilitate seamless coordination between the RBI and the government on payment-related policies.

Background

• The Payments Regulatory Board replaces the older Board for Regulation and Supervision of Payment and Settlement Systems (BPSS).
• The idea of creating an independent payments regulator was first proposed in 2018 by an inter-ministerial panel led by the Economic Affairs Secretary.
• RBI opposed the idea of an independent regulator outside its ambit, emphasizing the need for the RBI Governor to chair the board to ensure seamless oversight and functioning.
• After years of deliberations, the government nominees were included on the PRB, but the board remains under RBI leadership.

Composition and Functioning

• The PRB is a six-member board headed by the RBI Governor (Chairperson).

Members include,

• Deputy Governor in charge of Payment and Settlement Systems (ex officio).
• One RBI official nominated by the Central Board (ex officio).
• Three nominees from the central government (first time inclusion).
• The board may invite domain experts in payments, IT, law, and the RBI Principal Legal Adviser as permanent or ad hoc invitees.
• The PRB is required to meet at least twice a year to discuss regulatory matters.

Significance

• The inclusion of government nominees marks greater coordination between RBI and the government in payment system regulation.
• Retaining the RBI Governor as chair ensures continuity, authority, and expert oversight in a rapidly evolving payments landscape.
• The PRB will strengthen regulation of payment infrastructure, fostering innovation, security, and consumer protection.
• This move reflects the increasing importance of digital payments in India’s economy and the need for robust governance frameworks.