Ratan P Watal Committee on Digital Payments submitted report to Government

Dec 29, 2016 12:34 IST

The Committee on Digital Payments headed by Ratan P Watal in December 2016 submitted its report to the Union Ministry of Finance.

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The committee was formed by the Union Government to suggest measures for increasing digital financial transactions across the country. Accordingly, it has suggested the following recommendations in its report.

• Make regulation of payments independent from the purview of the Reserve Bank of India (RBI).

• Update the current Payments and Settlement Systems Act, 2007.

• Promote digital payments and receipts within Government.

• Create a fund proposed as DIPAYAN from savings generated from cash-less transactions.

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• Create a ranking and reward framework to encourage and recognise government agencies who lead the efforts on enabling digital payments.

• Consider outsourcing the operations of payment systems like Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT).

• Upgrade payment systems like RTGS and NEFT to operate on a 24x7 basis in the due course of time.

• Allow non-bank payment service providers (PSPs) to directly access payment systems.

• National Payments Corporation of India (NPCI) should be made payments centric in its ownership and objectives.

• Enable payments to be inter-operable between bank and non-banks as well as within non-banks.

• Create a formal mechanism to enable innovations and new business models.

• Implement other measures to promote digital payments.

In addition to the above recommendations, the committee also suggested other measures to promote digital payments including

• Promoting Aadhaar based eKYC and paperless authentication

• Providing disincentives for usage of cash

• Creating awareness and transparency on cost of cash

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• The committee to review the framework related to digital payments was formed by the Union Government on 23 August 2016.

• The 11-member committee was headed by Ratan P Watal. He is a former finance secretary. At present, he is a principal advisor to the NITI Aayog.

• Among the other things, the committee was asked to review the Payment and Settlement System Act, 2007, the Reserve Bank of India Act, 1934 and Information Technology Act, 2000.

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