Context: Recently, the Reserve Bank of India issued draft guidelines for establishing SROs responsible for framing and enforcing rules for payment systems operators.
About Self-regulatory organisations (SROs)

• An SRO is a non-governmental organisation that sets and enforces rules and standards relating to the conduct of entities in the industry.
• SRO shall be set-up as a not-for-profit company under the Companies Act.
• These will collaborate with all stakeholders in framing rules and regulations.
• Their self-regulatory processes will be administered through impartial mechanisms.
• It shall serve as a two-way communication channel between its members and RBI.
• It will work towards establishing minimum benchmarks, standards and help instil professional and healthy market behaviour among its members.
• The recognised 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.
• The organisation will establish a uniform grievance redressal and dispute management framework for its members.

Its Significance

• As the payment ecosystem matures and as the number of payments systems proliferate, it becomes necessary to optimally use regulatory resources to develop industry standards.
• 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.