personal finance

RBI proposes self-regulatory body for digital payment system


The Reserve Bank of India (RBI) has proposed to set up a self-regulatory organisation (SRO) by April 2020 to improve security, customer protection and pricing in India’s digital payment system.

As per the RBI document, “With substantial growth in digital payments and maturity gained by entities in the payment ecosystem, it is desirable to have a Self-Regulatory Organisation (SRO) for orderly operations of the entities in the payment system. The Reserve Bank will put in place a framework for establishing an SRO for the digital payment system by April 2020 with a view to fostering best practices on security, customer protection and pricing, among others. The SRO will serve as a two-way communication channel between the players and the regulator/supervisor.”

Post demonetisation, the government and central bank have announced various measures to foster the growth of digital transactions in India. The SRO, once operational, can improve security of digital transactions and rationalise fees paid by the consumer for digital payments.

In the policy statement today, RBI also announced establishing a ‘Digital Payment Index’. According to the policy document, “Digital payments in India have been growing rapidly. The Reserve Bank shall construct and periodically publish a composite “Digital Payments Index” (DPI) to capture the extent of digitisation of payments effectively. The DPI would be based on multiple parameters and shall reflect accurately the penetration and deepening of various digital payment modes. The DPI will be made available from July 2020 onwards.”

With the growth of digital payments, there has been increase in frauds related to the same. Digital payment methods such as Unified Payments Interface (UPI), mobile wallets etc. have become latest target of fraudsters.

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