RBI must upgrade RTGS, NEFT to operate 24x7: Digital payments report

Consider outsourcing the function of operation of payment systems like RTGS, NEFT: Report suggests

The report on Digital Payments, prepared by the committee headed by former Finance Secretary Ratan P. Watal, was put in public domain on Tuesday and suggests outsourcing electronic fund transfer systems like RTGS and NEFT and making the service available round the clock.

"RBI should progressively increase their timings over due course. Upgrade payment systems like RTGS and NEFT to operate on 24x7 basis in due course of time. Consider outsourcing the function of operation of payment systems like Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT)," the report said.

"While moving RTGS to a separate operator is not envisaged for now - a cost benefit analysis may be initiated as an initial step. Over time, multiple payment system operators should be encouraged and payment systems should be operated by market entities," it added.

The government put the report, which has recommendations to strengthen the digital payments ecosystem in the medium term, in public domain on Tuesday for a period of 15 days to invite suggestions and comments.

"Decision on the report will be taken after considering the comments or suggestions received on the report," Finance Ministry said in a notification here.

The report also suggests formation of a new Payments Regulatory Board, independent from the functioning of central banking.

"Make regulation of payments independent from the function of central banking. The statutory status of the new Board, within the overall structure of RBI, called Payments Regulatory Board (PRB) should be enshrined in the Payments and Settlement Systems Act, 2007," it said.

The report provides a framework for smooth and speedy transition towards a digital payments economy.

It recommends inclusion of financially and socially excluded groups and assimilation of emerging technologies in the market, while safeguarding security of digital transactions and providing level playing to all stakeholders and new players who will enter this new transaction space.

It has suggested inter-operability of the payments system between banks and non-banks, up-gradation of the digital payment infrastructure and institutions and a framework to reward innovations and for leading efforts in enabling digital payments.

Towards finalisation of the report, the Committee engaged extensively with all stakeholders and technology groups including Reserve Bank of India, state governments, Comptroller Auditor General of India, payment companies, technology companies and the academia.

The Committee on Digital Payments, constituted by the Ministry of Finance on August 23, had submitted the report to Finance Minister Arun Jaitley on December 9.