Govt considering regulator for electronic payments

PTIUpdated: Thursday, May 30, 2019, 09:44 AM IST
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New Delhi : With digital transactions gaining traction, the government is mulling setting up of a separate regulator for enabling electronic payment system in the country as well as regulate transaction charges.

While the Ratan Watal committee on digital payments suggested that the government makes regulation of payments independent from the function of central banking, sources said the RBI is not very keen on giving up the regulation on Payment systems.

Official sources said that RBI, as a banking regulator, frames policies to benefit banks and not enforcement of competition and innovation objectives in conduct of firms in the payment industry. “So far, regulations are becoming bank focused. If there is a separate regulator, the focus would be on ease of transaction and rationalisation of cost. Hence, there is a case for setting up of an authority for enabling electronic payment system in India,” an official source told PTI.

The Reserve Bank, in its representation before the Watal Committee, has stated that regulation of payments should be with the central bank because regulating money supply is an integral function of a central bank and includes maintaining the confidence in money as a means of exchange. Explaining the need for a separate regulator, the source said that electronic payment does not entail exchange of physical cash and it does not involve deposit taking or credit offtake or servicing of loans/deposits.

“Payments can happen without banking. Payment regulation is different from banking regulation. RBI is not agreeing to it,” the source said, adding the proposed regulator should have majority of its membership from businesses having direct familiarity with the payment process, or allied businesses.

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