Payment regulatory board to be created in RBI: Budget 2017

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. 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. As per the Finance Bill, the Reserve Bank will be the designated authority for the regulation and supervision of payment systems.The RBI governor will be chairperson, ex officio. The deputy governor who is in-charge of the Payment and Settlement Systems’ member, and one officer of the Reserve Bank to be nominated by its Central Board will be its members.The central government will also nominate three members to the board.

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