Topic: Statutory, regulatory and various quasi-judicial bodies
5) In view of the increased role of payments banks, is there a need to create a separate regulator for the sector. Examine.(250 words)
Why this question
The govt has recently mooted the idea of a separate regulator for the rapidly developing payments bank sector. Therefore it is important to examine the need for a separate regulator for the sector.
Comment- here we have to express our knowledge and understanding of the issue and form an overall opinion thereupon.
Key demand of the question.
The question wants us to form an opinion as to whether there is a need for a separate regulator for payments banks. We have to look into the issue and discuss the role of the other regulator and form an opinion based on a proper discussion and presentation of valid arguments and facts.
Structure of the answer
Introduction– write a simple definition of a payments bank- can accept deposits but can’t lend etc. mention a few big players like Airtel, paytm which have entered the business.
Discuss why there is no need for a separate regulator for payment banks. E.g the activities of payments banks come well within the purview of the traditional banking system, which the central bank oversees as the overarching financial regulator. Soit might make better sense to have the RBI oversee the activities of payments banks as well instead of creating a brand new regulator for the growing industry; Regulation of the banking systems and payment system by the same regulator provides synergy; a new regulator may decrease synergy with the functioning of the RBI etc.
Take the help of other relevant articles, study material to form your answer.
Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue.