Oversight of Payment Systems

Oversight is defined as a “central bank function whereby the objectives of safety and efficiency are promoted by monitoring existing and planned systems, assessing them against these objectives and, where necessary, inducing change” in the report "Central Bank Oversight of Payment and Settlement Systems, May 2005" published by the Committee on Payment and Settlement Systems, Bank for International Settlements.

The Payment and Settlement Systems Act, 2007 and the Payment and Settlement Systems Regulations, 2008 framed there under, provide the necessary statutory backing to the Reserve Bank of India for undertaking the Oversight function over the payment and settlement systems in the country.

The scope of the oversight has been spelt out in the Mission for Payment and Settlement Systems statement. The Mission statement states that the endeavour would be “to ensure that all payment and settlement systems operating in the country are safe, secure, sound, efficient, accessible and authorised”.

To achieve the above policy objectives of Oversight it is necessary to ensure that all payment systems operate within the above framework. The three key ways in which oversight activity is carried out are through (i) monitoring existing and planned systems; (ii) assessment and (iii) inducing change.

An Oversight Division in the Payment and Settlement Systems Department has been formed which is preparing a framework for structured oversight.