Recommendations of the Ratan P Watal Committee
- The Committee has suggested a medium-term plan for quickening India’s adoption of digital payments.
- The plan needs to be supported by a legal framework that encourages competition, interoperability, and open access in payments in order to close the digital gap.
- It has recommended upgrading the institutions and infrastructure supporting digital payments as well as the interoperability of the payments system between banks and non-banks.
- It also suggests a structure for rewarding ideas that are at the forefront of efforts to enable digital payments.
- Aadhaar and cellphone phones should be more widely used to make digital payments as simple as cash.
- The need for interoperable payments within non-banks as well as between non-banks was expressed.
- It was proposed to separate payment regulation from central banking in order to advance all digital payments.
- Additionally, it urges the market’s use of cutting-edge technologies as well as the participation of socially and economically marginalized people.
- Assemble the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) with the rest of the RBI.
- In order to give BPSS an express mandate for competition and innovation, consumer protection, open access and interoperability, controls on systemic risks, and data protection, it was demanded that the Payments and Settlement Systems Act, 2007, be amended.
- Following a cost-benefit analysis, the operation of payment systems like Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) may be outsourced.
- It emphasizes the necessity of preserving the security of digital transactions and ensuring fair play for all parties involved and new participants who will enter this new transaction environment.
Ratan P Watal Committee
In accordance with the Payment and Settlement Act of 2007, a “digital payment” is any “electronic funds transfer” 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 government’s digital initiative’s overarching goal is to lower the cash to GDP ratio from roughly 12% to 6% over the next three years, according to the “Committee on Digital Payments”. 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 nation’s 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 Committee’s 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.