As per the latest development, the digital payment industry may soon get its own regulator, if things go as per the plan.
Joint Venture Between IBA And PCI
According to the sources, the Banking lobby group Indian Banks’ Association (IBA) and its payment industry counterpart, Payment Council of India (PCI), are currently going through discussions to set up a non-profit joint venture.
This venture is expected to regulate the digital payments ecosystem in future work under the Reserve Bank of India’s newly issued Self-Regulatory Organization (SRO) framework for Payment System Operators.
Why A New Entity?
The proposed entity will be managed by the members from both the banking and the payments industry, as per the sources.
Officials said, “PCI is in talks with IBA to jointly apply for an SRO license, as a JV with the latter will bring more pedigree to the application,” said one official.
“It’s still early days as they will have to seek clarity on the partnership from the banking regulator RBI,” said the officials.
There will be a formal discussion between PCI and IBA to finalize the proposal that could be organized this month.
Once it’s finalized, the proposal will have to be submitted to the Department of Payments and Settlement Systems of the RBI.
It has to be a joint application as there is a growing interconnectedness of the banking and payments industry.
So, this will ensure checks and balances, and to negate any conflict of interest in the enforcement of specific regulations.
So far, IBA and PI have not commented on this development.
Here, PCI is an industry body representing the interests of all leading payment systems and settlement providers such as Google Pay, Paytm, PayU and others.
New SRO Liaison With Other Entities
As envisioned by the central bank, the new SRO for payment system operators (PSOs), will broadly liaison between the industry, government and regulators to streamline policy decisions, improve communication, enforce standards and resolve disputes.
As planned by IBA and PCI, it would have specific objectives.
This will ensure compliance among payment gateways (PGs) and payment aggregators (PAs) under the new license regime of RBI, as per the sources.
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