Extract:
An Inter-Ministerial Committee
for finalization of amendments to the Payment & Settlement Systems Act,
2007 was formed by the Government under the chairmanship of Secretary,
Department of Economic Affairs. RBI was represented in the Committee.
Draft report of the Committee has
been placed in public domain by the Government. RBI representative has
submitted a dissent note on certain recommendations of the Committee, a copy of
which is reproduced below for public information.
Dissent
Note : -
Payment systems are a sub-set of
currency which is regulated by the RBI. The overarching impact of Monetary
policy on payment and settlement systems and vice versa provides support for
regulation of payment systems to be with the monetary authority.
There is an underlying bank
account for payment systems which is under the purview of banking system
regulation which is vested with the RBI.
Settlement systems are finally
posted in the books of account of banks with the RBI to attain settlement
finality. Regulating these entities goes hand in hand with the settlement
function.
There are certain payment systems
like cards which are issued by banks globally. Dual regulation over such
instruments will not be desirable.
In India, the payment system is
bank-dominated. 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.
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 Payments Regulatory Board
(PRB) must remain with the Reserve Bank and headed by the Governor, Reserve
Bank of India. It may comprise 3 members nominated by the Government and RBI
respectively, with a casting vote for the Governor to ensure smooth operations
of the Board.
The composition of the PRB is
also not in conformity with the announcements made in the Finance Bill by the
Honorable Finance Minister.
Generic comments of RBI on certain recommendations of the report
can be read here.
