The government, keen on promoting digital payments, will form a separate regulator for the payments industry to resolve disputes, ensure customer protection and check any foul play by dominant players.Finance minister Arun Jaitley has called for an overhaul of the Payment and Settlements Act 2007 to create the Payments Regulatory Board. He said the board would be under the Reserve Bank of India (RBI). This is being done to avoid criticism that the board would dilute the banking regulator’s powers.
“It is proposed to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems,” said Jaitley in his Budget speech. “The Payments Regulatory Board will exercise the functions relating to the regulation and supervision of payments and settlement systems under the Act.”
The payments industry has been crying for attention in the wake of the explosion of financial technology companies that facilitate transactions. Consumers have embraced their services due to the simplicity they offer. But there have been allegations that dominant banks have been creating hurdles for such companies to protect their turf.
The board would look at interoperability of digital transactions and facilitate competition and innovation among financial technology companies in the payments space. It will also be responsible for consumer protection, decide on penalties and create appeal mechanisms, which could ensure faster resolution of disputes over settlement of digital payments.
The proposed board will have the RBI governor as the chairperson, along with a deputy governor in charge of payments as member, besides an RBI officer nominated by the RBI Board. It will also have three members nominated by the central government.
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