We missed this earlier. B.P. Kanungo, Deputy Governor, Reserve Bank of India, said that the central bank favoured competition and innovation in every field including payments systems and allowing non-banks into the payment ecosystem was done to foster this. He said that the central bank giving the go-ahead to non-banking entities to set up PPIs and establish while label ATMs, helped create innovation and that this will guide the regulatory philosophy in the coming years as well. This is in stark contrast with the Ratan Watal Committee report, which recommended the formation of a Payments Regulatory Board (PRB) which would regulate payments in the country. The PRB would look at regulation of payments independent from the function of central banking. The PRB can be formed by making the Board for Payment and Settlement Systems more independent by introducing members from outside the RBI. The Watal Committee pointed that payments systems run by the RBI to favour banks: “The most notable distortion in the market, is the case of RTGS, NEFT and NECS, where the RBI performs both commercial functions, as well as regulatory functions. This leads to a conflict of interest, and goes against the principles of competitive neutrality.” It was also reported in the press that the central bank had other reservations on some of the committee’s recommendations like data and consumer protection and Separation of banking and payments. Quest to improve digital payments Speaking at the National Payments Corporation of India (NPCI) National Payments Excellence Awards function in May, the…
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