Notification No. S.O. 2031(E); Dated: 06.05.2025
1. Background
The Government of India has notified 9th May 2025 as the effective date for the enforcement of Sections 152 and 153 of the Finance Act, 2017. These sections pertain to amendments to the Payment and Settlement Systems Act, 2007 (PSS Act)—the key legislation governing payment systems in India.
2. Key Amendment – Change in Regulatory Structure
A significant change brought about through these amendments is in Chapter II of the PSS Act, which deals with the ‘designated authority’ responsible for regulating and supervising payment systems in India.
- Earlier Provision – The Reserve Bank of India (RBI) was required to constitute a committee of its Central Board to perform the functions and discharge the duties under the PSS Act.
- Revised Provision – With the notified amendment, the RBI shall now exercise its powers and functions through a dedicated ‘Payments Regulatory Board’, established under the PSS Act. This Board will serve as the designated authority under the law.
3. Objective of the Amendment
The change is aimed at –
- Strengthening the governance framework for payment systems
- Enhancing independence and accountability in regulatory decision-making
- Aligning India’s regulatory structure with global best practices in digital payments and financial infrastructure
4. Implications
With this amendment now in force –
- The Payments Regulatory Board becomes the principal body for oversight of India’s fast-evolving digital payment ecosystem.
- It marks a structural shift in regulatory authority, allowing for more focused, expert-led governance of payment and settlement systems.
5. Conclusion
The operationalisation of Sections 152 and 153 from 9th May 2025 marks a milestone in India’s journey toward modernising its payment regulation regime. Stakeholders in the fintech, banking, and payment service sectors should take note of this revised governance structure under the PSS Act.
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