India’s two most influential technology and internet associations are in the fight to set up an industry body to oversee the country’s escalating digital payments ecosystem under Reserve Bank of India’s Self-Regulatory Organisation (SRO) framework.

The Internet and Mobile Association of India (IAMAI), an industry body of all the leading internet and technology companies in the country, is making a proposal led by its digital payments arm, the Payments Council of India (PCI). The Indian Banks’ Association (IBA) is also considering joining the bid with PCI to form this SRO.

Bengaluru-based thinktank, Indian Software Products Industry Round Table (iSPIRT), the architect of some of India’s core digital rails like combined Payments Interface and Aadhaar, is also preparing its bid through a group entity Digital Collective for Empowerment (DICE).

PCI and iSPIRT have appointed consultants and are situation up their individual non-profit entities under the Companies Act as mandated by the RBI framework that will front the SRO bid, the sources added. A formal proposal is expected to be obtainable before the regulator in the next three months, they indicated.

Navin Surya, chairman-emeritus of PCI, states, “From the very beginning, we have been clear and transparent about our objective to set up an SRO for the digital payments industry. We suggested the idea to the regulator even before the framework was released. Our objective is to create an SRO that has the most diverse membership from all relevant stakeholders. The mandate really is to issue appropriate standards in the implementation of regulations, while also keeping our lines of communication open with RBI.”

The new SRO for payment system operators (PSOs), as envisaged by the central bank, would broadly liaison between the industry, government, and regulators for streamlining policy decisions, improving communication, enforcing standards, and resolving disputes.

Banking Officials, states, “The purpose of an SRO is also to outsource some of the supervision mandates of RBI to a relevant and competent authority of industry participants. It is also to promote a principle and consultation-based formulation of regulation to foster ecosystem growth.”

Specific objectives pertaining to observance among payment gateways (PGs) and payment aggregators (PAs), easing the backend integrations of New Umbrella Entities (NUE) granted licenses by RBI with the parallel systems of National Payments Corporation of India, could also be among the SRO’s objectives.

SROs to self-govern the payments ecosystem have been a long-stated objective of the central bank. The proposed SRO can only have synchronized banks or non-banks as members. It can, conversely, be a group or an association of payment system operators as well.

RBI’s framework document, states, “As the payment ecosystem matures and the number of payments systems proliferate, it becomes necessary, in the interest of optimal use of regulatory resources, that the payments industry develops standards in respect of system security, pricing practices, customer protection measures, grievance redressal mechanisms, etc.”

“While self-regulation would release regulatory resources that can be better focused on issues of systemic importance, it would, by virtue of being developed by the industry itself, be more appropriate and encourage better compliance,” frameworks adds.