The Reserve Bank of India has released the draft guidelines for the proposed Self-Regulatory Organization (SRO) responsible for setting and enforcing internal rules for the participants in India’s burgeoning digital payment ecosystem.
The proposed SRO will be expected to act as a two-way communication channel between the payments industry and the central bank. It shall also be responsible for maintaining benchmarks and standards for proper functioning among member entities, as per the draft norms released by RBI on Tuesday.
“An SRO is constituted with an expectation to provide a link between the regulator and market participants through a less formal set-up,” said the RBI. “It makes for structured participation of the Payment System Operators in the regulatory process and helps in meeting regulatory expectations in a more participative manner.”
The proposed entity will be set up under Companies Act as a not for profit body and shall set a code of conduct to be followed by the members. The understanding is that the central bank may approve multiple SROs for improving the governance of India’s highly fragmented digital payments ecosystem.
RBI has given time till September 15 for industry participants and the general public to submit their observations on the draft framework following which the central bank will place the final guidelines and open the application window for interested groups.
“The recognized SRO, invited for periodical interactions with the Reserve Bank, shall reasonably be expected to look at the larger picture of the segment / industry before offering its views / inputs / suggestion,” RBI said.
“Such an SRO shall be expected to address concerns beyond the self-interest of its membership, viz. to protect customers, participants and other stakeholders in the ecosystem. It shall play an important role in supplementing and complementing the present regulatory / supervisory arrangements,” the central bank added.
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