The Reserve Bank on Thursday issued final guidelines, including the framework, to set up a self-regulatory organisation for payment system operators as part of its payment and settlement systems vision. The framework will enable the central bank to recognise a self-regulatory organisation (SRO) for payment system operators (PSOs). The plan was announced in February 2020 monetary policy.
"Interested groups/association of PSOs (banks as well as non-banks) seeking recognition to be an SRO may apply to the chief general manager, department of payment and settlement systems at the RBI," the regulatory circular said.
An SRO is a non-governmental organisation that sets and enforces rules and standards relating to the conduct of its members to help protect customers and promote ethical and professional standards.
An SRO can help frame rules for system security, pricing practices, customer protection measures, grievance redressal mechanisms, among others, and is expected to resolve the disputes among the members internally through mutually accepted processes to ensure that members operate in a disciplined environment and even accept its penal actions.
The central bank said the SRO shall be set up as a not-for-profit company under the Companies Act of 2013 and only regulated payment system entities such as banks and non-bank PSOs can be members of the SRO.
At least one-third of the members on the board of directors of the SRO shall be independent and not associated with member institutions.
The board shall frame a code of conduct for the members.