Following the proposal of a payments regulator to be established independent of the Reserve Bank of India (RBI), the central bank has put forward a public objection. The regulator would have a chairperson chosen with input from the RBI, but the central bank objects to having the regulator outside of its control and not led by its governor, Reuters reported.
“Regulation of the payment system by the central bank is the dominant international model for stability consideration,” the central bank said in a note on Friday (Oct. 19). “The Payments Regulatory Board (PRB) must remain with the Reserve Bank and headed by the governor, Reserve Bank of India.”
The news comes as the bank has not backed down on a requirement that global payments companies store data locally. As such, WhatsApp, Facebook’s messaging app that is trying to make inroads in the digital payments market in India, has created a system to store payment data locally in India.
Reuters, citing a statement from WhatsApp, reported the company confirmed it built the system in response to India’s payment data guidelines. India has required companies to store data locally on Indian consumers. According to the report, WhatsApp has a user base that is higher than 200 million in India, and has been trying to break into the payment market in the country.
While WhatsApp began testing payments in the country earlier this year with around one million users, it has delayed its formal launch, partly due to a need for clarity on the part of Indian regulators as to how the data is supposed to be stored.
The move to launch a payment app in India makes sense, given that Credit Suisse predicts it will be a $1 trillion market by 2023, reported Quartz. WhatsApp has been slow in launching its payment app in the country because it first needed the nod from the government. In June, Bloomberg reported that the Ministry of Electronics and Information Technology (MeitY) asked WhatsApp, along with partner banks, to provide additional details about the system.