Background
- The Payment Regulatory Board (independent of RBI) was proposed by Ratan Watal committee to promote competition & innovation in the payment network in India.
- At present, Board for Regulation & Supervision of Payment & Settlement systems supervises the payment network in India.
- Latest Budget has suggested that the Payment Regulatory Board to setup in the RBI consisting of 6 members.
(ii) The chairman of the board will be RBI Governor.
(iii) Deputy Governor of RBI in charge of Payments & Settlements will also be a member.
Need of the proposal
- The Payment & Settlement Systems Act 2007 (PSS Act) constrains the reach of digital payments, thus supporting the cash proposals.
- It is Silent on data protection issues.
- Committee also states that the present law does not concentrate on supporting competition in the payments sector.
- Payment system is a more Technology- Business focused activity, which should be observed independently from the banking sector.
Importance of the proposal
- It is visualized that an independent body concentrated on the goal to enable digital payments would increase the digital payments from the current 5% to about 20% in three years.
Board for Regulation and Supervision of Payment and Settlement System
- It is a sub-committee of the Central Board of the RBI.
- It is the top policy making organization on payment systems.
- It has the power to approve, recommend policies & set standards to control & supervise all the payment & settlement systems in the country.
- It is a constitutional body set as per the Payment & Settlements Act 2007.
Few Recommendations of ‘Ratan Watal’ Committee:-
- A moderate term strategy for accelerating growth of Digital payments in India is required.
- The strategy should be backed with regulatory system which is favorable in bridging the Digital divide by supporting competition & open access in payments.
- Better use of Aadhar & mobile numbers for creating digital payments as easy as cash. This is needed besides, the enhanced digital security.
