Context
Centre will review the Payment and Settlement Systems Act, 2007, and bring about amendments
What has happened?
Addressing the concern raised by the RBI in setting up a payments regulatory board, Budget has proposed that it will be set up within RBI’s ambit
RBI’s concerns
RBI had expressed concerns that
Proposal
- Six members: The payment regulatory board will be set up within the RBI which will comprise of six members, of which three will be from RBI, according to the Finance Bill which was tabled in the Parliament on February 1
- Governor of RBI to be the Chairman of the Board:The chairman of the board will be the Governor of RBI
- Deputy governor of RBI to also be a member:The central bank’s Deputy Governor in-charge of payments and settlements will also be a member
- Nomination of 3rd member:RBI will also nominate a third member
- 3 members to be nominated by centre:The three external members will be nominated by the Centre
Who recommended that thepayment board should be an independent body?
Watal Committee: The government had set up a Committee on Digital Payments — headed by finance secretary RatanWatal, which recommended the board to be an independent body
- Mandate of Watal Committee: The Watal committee was given the mandate for laying down a medium-term roadmap for digital payments to grow substantially over the next three years from the current level of about 5%t of personal consumption and 20% of all transactions
- Structural reforms: The Committee on Digital Payments has recommended structural reforms in the payment eco system, including amendments to the Payment and Settlement Systems Act, 2007
- Creating a Payment regulatory board: It is proposed to create a Payments Regulatory Board in the RBI by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems
