Government may set up separate regulator for e-payment services like Paytm, MobiKwik
The regulation issue of independent payments has become a most important task for central government. But the point of view of RBI towards giving up regulation on payment systems is against the government favour. It has become a serious matter for government to setup a separate regulator for electronic payment system because the trend of digital transactions is getting popular every day. Government’s ambitious project of digitalisation is totally depends upon the polices that government will make to regulate electronic payments in country.
Watal Committee Report
Under the supervision of Ratan Watal committee on digital payments suggestions, it is concluded that digital payments should be done independently. The report state that separate regulator for payments must be established without central banking system interference. The committee explained that RBI is working like a banking regulator in country who makes policies for the banks only. This committee gave the following reasons in the favour of separate regulator:-
- The objectives of payment industry are totally different from banking focuses. Enforcement of Competition and innovation is main objective of payment firms where as regulation is basic objective of banks.
- Payments can be done without hard cash, which doesn’t involve any banking activity like deposit or withdrawal.
- Separate regulator will make it easy to focus on transactions being done through digital methods. It will also helpful for the rationalization of cost.
But RBI is not willing to give up the regulation on payment systems. RBI has their own reasons for denying this proposal. Reserve bank explained that regulation of monetary supply is a fundamental function of central bank. They are liable to maintain the assurance of money as a primary mean of exchange. In the era of enforcement in digital transactions, RBI wants to maintain the existence of hard cash as a trusted way of transactions.
While submitting its report to finance minister, the committee highlighted 2 options for regulation of electronic payments.
- Creation of new payment regulator is advised that will independently handle all the issues of digital payments. Digital payments don’t need any hard cash so central banking system interference must be minimised to make it work efficiently.
- Another option by committee is to provide full independence for currently working for regulation supervision of payments and settlement system board. As they are already handling all the functioning activities, so giving full authority will leads to the independent supervision of digital payments.
RBI is working as a banking regulator since the currency came to existence. But now the whole scenario is changing because government is decreasing the use of hard cash in every sector. Digital money is taking place of physical money which is very important to end the black money concept. Reserve bank has to cooperate with central government for better implementation of digitalization. Traditional ways of transactions have gone old now because corrupt people have discovered too many loop holes in current transactions system to hide the money.