Governor Sanjay Malhotra-led Payments Regulatory Board to replace BPSS: RBI

On Tuesday, the Reserve Bank of India established the new Payments Regulatory Board (PRB). This marks a new phase of oversight in the payments sector following amendments to the Payment and Settlement Systems Act, 2007 (PSS Act, 2007).

The RBI stated that the amendments to Section 3 of the Act, implemented via the Finance Act, 2017, became effective from May 9, 2025. This announcement followed the issuance of the Gazette Notification on May 6, 2025, by the Department of Financial Services.

With this move, the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) — which functioned as a committee of the RBI’s Central Board — has been replaced. The PRB will now serve as the apex authority for regulating and supervising payment and settlement systems in the country.

The newly constituted Payments Regulatory Board, formed under Section 3(2) of the PSS Act, 2007, will be headed by the RBI Governor, as Chairperson. Other members include the Deputy Governor, RBI, who will be in charge of Payment and Settlement Systems, the Executive Director, RBI, in charge of Payment and Settlement Systems, the Secretary, Department of Financial Services, Ministry of Finance, the Secretary, Ministry of Electronics and Information Technology and Aruna Sundararajan, IAS (Retd.).

Additionally, the Principal Legal Adviser of the RBI will serve as a permanent invitee to all PRB meetings, as per the Payments Regulatory Board Regulations, 2025.

The RBI, in its circular, emphasised that the establishment of the PRB marks a significant institutional shift, thereby strengthening oversight of India’s rapidly growing digital payments ecosystem.

Today, the regulator has issued new guidelines to provide borrowers with greater flexibility and broaden lending choices for banks. Effective October 1, 2025, these guidelines specify interest rates on advances and loans secured by gold and silver collateral. This initiative is viewed as part of the RBI’s strategy to strike a balance between borrower advantages and bank flexibility, aiming to enhance credit accessibility while maintaining a strong financial system.