The Reserve Bank of India (RBI) went public with its resistance to the Centre’s proposal to set up an independent Payment Regulatory Board (PRB) which will oversee all payment systems in the country stating that the proposed body “must remain with the Reserve Bank” and headed by the RBI Governor. Coming out strongly against the Inter-Ministerial Committee’s proposal to take PRB out of the RBI’s purview, the RBI said there has been no evidence of any inefficiency in payment systems of India.
Coming out strongly against the Inter-Ministerial Committee’s proposal to take PRB out of the RBI’s purview, the RBI said there has been no evidence of any inefficiency in payment systems of India.
The seven-member government panel was headed by Subhash Chandra Garg. The panel proposed in August that a payments regulator should be established independent of the RBI, with a chairperson appointed by the government in consultation with the RBI. The proposal overruled the central bank’s recommendation that its governor should be head of the payments regulator.
The RBI cited the report of the Ratan Watal Committee on digital payments as recommending the establishment of the PRB within the overall structure of the RBI, arguing therefore that there is no need for any deviation.
Also, as per RBI, there has been no evidence of any inefficiency in payment systems of India. The digital payments have made good and steady progress. India is gaining international recognition as a leader in payment systems. Given this, there need not be any change in a well-functioning system.
The RBI has argued that the payment system is bank-dominated in India. “Regulation of the banking systems and payment system by the same regulator provides synergy and inspires public confidence in the payment instruments. Regulation of the payment system by the central bank is the dominant international model for stability consideration. Thus, having the regulation and supervision over Payment and Settlement systems with the central bank will ensure holistic benefits,”
The RBI said it is not totally against a new Payment and Settlement System Bill but stressed that changes should not lead to existing foundations being shaken in a well-functioning structure.