Government panel recommends setting up an independent Payments Regulatory Board

Government panel recommends setting up an independent Payments Regulatory Board

News

1. Finance Minister proposed about creation of Payment Regulatory Board (PRB) in Budget 2017-18.

Key Facts

2. The government has set up Subhash Garg committee to re-examine the draft Payment and Settlement System Bill.
3. Objectives of the draft Payment  and Settlement Bill

• Foster competition
• Consumer Protection
• Systemic Stability
• Resilience in payments sector
• Establishment of an independent PRB
• Treating non-banks as significant players in the payment ecosystem
• To consolidate and amend the laws relating to payments

Recommendations of the Committee

4. It suggested PRB to be an independent payments regulator.
5. The committee supported the view that formal mechanism of coordination is required between the RBI and PRB to regulate payments to ensure financial stability, monetary policy and credit policy.
6. As per the report, RBI wants the chairperson of PRB should be from RBI as well as RBI to have a casting vote.
7. RBI wanted to be provided with sufficient powers in the context of monetary policy function but the committee rejected the view.
8. The committee affirmed RBI that substantial provisions are included in the bill to give the central bank the powers to make a reference to PRB to consider any matter, which is related to monetary policy.
9. RBI’s view: Problems could emerge in the regulation of payments if PRB is not within the ambit of RBI.