On August 18, 2020, the Reserve Bank of India (RBI) released a draft framework for grant of recognition to an industry association as a Self-Regulatory Organisation (SRO) for Payment System Operators (PSOs). This draft framework is released on the lines of an announcement in the Statement on Developmental and Regulatory policies issued as part of the Monetary Policy statement dated February 6, 2020. The framework is placed for public comments till September 15, 2020.
- Notably, SRO will serve as a watchdog to guard against unprofessional practices within an industry or profession.
- This decision has been taken because there is substantial growth in digital payments and an entity is required for orderly operations of the entities in the payment system.
Key Points from Draft Framework:
-The aim behind setting up of SRO is to provide a link between the PSOs and Reserve Bank through a less formal set-up
-The proposed entity will be set up under Companies Act, 2013 as a not for profit body and non-governmental organisation.
-The SRO will cover operators in all segments of payment systems and best practises will be observed on security, customer protection and competitiveness.
-It also set a minimum code of conduct and standards in the payments space to be followed by the members for proper functioning among member entities.
Recent Related News:
On June 8, 2020, after exercising the powers conferred by the Banking Regulation Act, 1949 and the Reserve Bank of India (RBI) Act, 1934, RBI has proposed two draft documents titled “Draft Comprehensive Framework for Sale of Loan Exposures” and “Draft Framework for Securitisation of Standard Assets” consisting of guidelines applicable to all Scheduled Commercial Banks (excluding Regional Rural Banks) and All India Financial Institutions.
About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).