Background: SC Garg committee
- In August 2018, the panel formed by the government for finalisation of amendments to the Payment & Settlement Systems Act, 2007 under economic affairs secretary SC Garg’s chairmanship submitted its report.
- It recommended that the proposed Payments Regulatory Board (PRB) should be an independent regulator outside RBI’s purview.
Arguments against an independent PRB by RBI:
- View of SC Garg committee is in contrast to what was proposed by Finance Minister Arun Jaitley in the Finance Act, 2017.
- The Ratan Watal Committee on digital payments had recommended the establishment of the PRB within the overall structure of the RBI.
- Since banks are regulated by the RBI, a holistic regulation by RBI will be more effective and not result in increased compliance costs.
- There needs to be integrated operations and not co-ordination. Co-ordination is required across different but related functions, which is not the case for payment systems.
- Objectives for the PRB were best avoided to be mandated by law as the law might not provide the much-needed flexibility.
