No Independent Payment Regulator: RBI
By F9 Team : 19-Dec-2016
The RBI on Saturday has made an announcement that it is rejecting the proposal of setting up an independent regulator for payments and settlements that is currently one of the functions of RBI.
The report containing this proposal has been made in light of when the country is marching towards bringing a Digital Payments environment in the Indian economy after the withdrawal of the high value currency notes.
In the month of September, RBI has set up a committee to review the Digital Payments, under the supervision of Finance Secretary Ratan Watal. The committee also includes RBI’s former deputy governor H.R. Khan and Executive Director Chandan Sinha as its members.
The committee’s one of the reference terms is to analyse and recommend changes for the regulatory mechanism under several acts that include Payments and Settlement Act, the RBI Act, and the Information Technology Act among others.
In the committee report, the RBI is advised that, while the RBI will act as the regulator for SIPS (systematically important payments system), a separate board, Payments Regulatory Board (PRB), is to be created for monitoring and regulating retail payments, and will function under the RBI control. The committee also suggested that the PRB will be an independent body.
However, Mr. Khan, wrote to the committee that, “There is no need to create confusion by artificially bifurcating payment systems for bringing them under two sets of regulators.”
He also added that, “The idea of segregating retail payments from wholesale/systemically important payments system does not jell with the increasing global recognition of importance of retail payments system.”
Meanwhile, the RBI has considered a monetary-policy-committee-style structure for the PRB, where the outcomes are decided independently, while the implementing decision retains with the RBI.