India has launched the Payments Regulatory Board (PRB), a major change in how it controls its fast-growing digital payments system. It replaces the earlier Board for Regulation and Supervision of Payment and Settlement Systems (BPSS). For the first time, regulatory power over a core financial infrastructure will be shared between the Reserve Bank of India (RBI) and the central government.
Evolution of Payment Oversight in India
India’s payment regulations have developed alongside its digital growth. The Banking Regulation Act of 1949 built the foundation, while the Payment and Settlement Systems Act of 2007 gave the RBI direct control over payment systems.
With the rise of innovations like UPI, Aadhaar-based payments, and prepaid instruments, new challenges emerged. These include interoperability issues, fragmented oversight, and the need for faster policy decisions.
PRB’s Role and Structure
The PRB continues the RBI’s legacy of protecting consumers through grievance redressal and KYC rules, maintaining system resilience through cybersecurity, and managing risks.
It will have six members—three nominated by the RBI and three by the government. This setup aims to ensure both technical expertise and policy alignment.
Addressing New Risks in a Growing Market
In 2024, India made nearly half of the world’s real-time digital payment transactions. As volumes rise, so do risks—from infrastructure strain to cyberattacks.
The PRB’s hybrid model allows faster responses to threats while still supporting innovation. This includes handling tokenised payments, AI-driven fraud detection, and digital currency experiments.
Focus on FinTech and Industry Collaboration
FinTech companies may benefit from clearer rules on blockchain, programmable payments, and cross-border transactions.
The board plans to involve experts in cybersecurity, data privacy, and digital law to tackle issues like UPI outages, infrastructure gaps, and fraud risks.
It may also invite specialists from telecom, e-commerce, and retail to ensure policies meet wider industry needs.
Likely Policy Changes Ahead
The PRB could revise rules for prepaid instruments, QR code standards, and merchant onboarding. It aims to strike a balance between innovation and consumer protection.
Discussions may also reopen on merchant discount rates (MDR) for large retailers and expansion of the New Umbrella Entity (NUE) payment framework.
Global Parallels and India’s Vision
Australia’s Payments System Board offers a global comparison—its central bank chairs the board, with government-appointed external members.
India’s PRB follows a similar mix of public accountability and private input. It supports the country’s broader goal of financial inclusion, innovation, and risk control.
Looking Ahead
The RBI’s Digital Payments Index stood at 465.33 in September 2024, showing rapid adoption and quality improvements. The PRB aims to maintain this momentum by encouraging open systems, better interoperability, and stronger security.
Emerging payment modes like wearables, face-based authentication, and palm payments may get policy support, adding convenience and safety for users.
The PRB is designed not just as a regulator but as a collaborative platform—one that builds trust, speeds up decision-making, and keeps India’s digital payment growth sustainable.