Last week, a government panel recommended to India’s finance minister that an independent Payments Regulatory Board (PRB) oversee that country’s rapidly evolving payments system.
More specifically, the panel advises that four (of the seven) members of the board be appointed directly by the government and the chairperson be appointed by the government in consultation with the Reserve Bank of India (RBI), according to Inc42.
Under the current PRB structure outlined in the Finance Act of 2017, the board is chaired by the governor of the RBI, according to the Economic Times.
That act amended the Payment and Settlement Systems Act 2007, which “provides for the regulation and supervision of payment systems in India” via a designated committee, governed by the RBI, to oversee its initiatives.
According to the Inc42 article, the current version of the PSS Act that designates the RBI as the authority for payments and settlement in India has caused a bit of a power struggle with the central government.
Do these latest recommendations have the potential to impact the fintech industry in India positively or negatively?
“The RBI currently does not regulate payments gateways, which is good for us,” said Harshil Mathur, co-founder and CEO of payments startup and payment facilitator Razorpay via the Inc42 article. “However, there are a number of issues that remain unaddressed. And, there remain some grey areas that are yet to be addressed under the legal ambit. With the PRB being a separate and independent board, it will be relatively easier to address such concerns.”
According to the same article, the panel also recommended that, while the RBI could make payments-related suggestions to the board, it would no longer have enforcement power.