Issues Faced by the Ratan P Watal Committee
One of the committeeâs responsibilities was to research and make recommendations for modifications to the regulatory framework established by different acts, including the Information Technology Act, the Payments and Settlement Act, and the RBI Act, among others. In order to promote digital payments, the committee had proposed making the regulation of retail payments independent from the role of the RBI. It had recommended keeping RBI regulation just for SIPS and urged for the creation of a separate Payments Regulatory Board (PRB) as an autonomous authority for retail payments (a systemically important payment system). Due to many factors, such as system interoperability concerns and the central bankâs function as the lender of last resort, the SIPS and retail payment systems are both reportedly under the control of the central bank (LOLR). For the PRB, the RBI has proposed a structure akin to a monetary policy committee, in which decisions are made independently but implementation is left to the banking regulator.
Ratan P Watal Committee
In accordance with the Payment and Settlement Act of 2007, a âdigital paymentâ is any âelectronic funds transferâ method. It includes point-of-sale transfers, automated teller machine transactions, direct deposits or withdrawals of funds, transfers initiated by phone, internet, and card payments. A person may also initiate a digital payment by giving a bank instructions, authorizations, or orders to debit or credit an account held with that bank through electronic means. The governmentâs digital initiativeâs overarching goal is to lower the cash to GDP ratio from roughly 12% to 6% over the next three years, according to the âCommittee on Digital Paymentsâ. The committee was led by former finance secretary Ratan P. Watal. The Finance Ministry notified the 11-member committee of its existence in August 2016. Its job was to assess the nationâs current payment infrastructure and make recommendations for the best ways to promote digital payments. The Reserve Bank of India (RBI), the Unique Identification Authority of India (UIDAI), the tax department, and numerous industry organisations in the payments sector were also represented. The Committeeâs goal is to create a road map that will enable the growth of digital payments during the following three years. The report suggests integrating future technology into the market as well as including socially and economically marginalized people. It aims to protect the security of digital transactions and ensure fair play for all players, including those who will join this new transaction area, as well as stakeholders.
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