RBI issues guidelines for SROs in payments1 min read . Updated: 19 Aug 2020, 08:14 AM IST
A self-regulatory organization will serve as two-way communication channel between its members and RBI
MUMBAI : The Reserve Bank of India (RBI) on Tuesday issued draft guidelines for establishing self-regulatory organizations (SROs), which will be responsible for framing and enforcing rules for payment systems operators.
An SRO, RBI said, is a non-governmental organization that sets and enforces rules and standards relating to the conduct of entities in the industry. These will collaborate with all stakeholders in framing rules and regulations, and their self-regulatory processes will be administered through impartial mechanisms, it said.
“As the payment ecosystem matures and as the number of payments systems proliferate, it becomes necessary, in the interest of optimal use of regulatory resources, that the payments industry develops industry standards in respect of system security, pricing practices, customer protection measures and grievance redressal mechanisms," it added.
The central bank said while self-regulation will help release regulatory resources that can be better focused on issues of systemic importance, it would be more appropriate and encourage better compliance.
The organization shall serve as a two-way communication channel between its members and RBI. That apart, it will work towards establishing minimum benchmarks, standards and help instil professional and healthy market behaviour among its members, RBI said.
“The recognized SRO shall promptly inform RBI about any violation that comes to its notice of the provisions of the Payments and Settlement Systems Act or any other regulation issued by RBI."
One of the important tasks of the organization will be to establish a uniform grievance redressal and dispute management framework for its members. An SRO shall be set-up as a not-for-profit company under the Companies Act, RBI said, adding that it will also have to be professionally managed with clear bye-laws.