Payment and Settlement Systems Act, 2007

Source: ET

Context: The Reserve Bank of India (RBI) has tightened norms for imposing monetary penalties and compounding offences under the Payment and Settlement Systems Act, 2007 (PSS Act).

About Payment and Settlement Systems Act, 2007 (PSS Act):

• What is the PSS Act?

• The Payment and Settlement Systems Act, 2007 (PSS Act) is a legislation that regulates and supervises payment systems in India. It designates the Reserve Bank of India (RBI) as the authority responsible for overseeing payment systems and ensuring their smooth functioning.

• The Payment and Settlement Systems Act, 2007 (PSS Act) is a legislation that regulates and supervises payment systems in India.

• It designates the Reserve Bank of India (RBI) as the authority responsible for overseeing payment systems and ensuring their smooth functioning.

• To provide a legal framework for the regulation and supervision of payment systems in India. To ensure financial stability, efficiency, and consumer protection in payment systems. To establish netting and settlement finality as legally enforceable concepts.

• To provide a legal framework for the regulation and supervision of payment systems in India.

• To ensure financial stability, efficiency, and consumer protection in payment systems.

• To establish netting and settlement finality as legally enforceable concepts.

• Important Features:

• Authorization Requirement: No entity can operate a payment system without authorization from the RBI. Definitions: The Act defines key terms like payment system, payment obligation, payment instruction, and settlement. Regulatory Powers: The RBI can impose monetary penalties, compound offences, and take enforcement actions against violators. Board for Regulation and Supervision (BPSS): A committee of the RBI’s Central Board that oversees payment systems.

• Authorization Requirement: No entity can operate a payment system without authorization from the RBI.

• Definitions: The Act defines key terms like payment system, payment obligation, payment instruction, and settlement.

• Regulatory Powers: The RBI can impose monetary penalties, compound offences, and take enforcement actions against violators.

• Board for Regulation and Supervision (BPSS): A committee of the RBI’s Central Board that oversees payment systems.

• RBI Powers Under the PSS Act:

• Authorization: The RBI grants or denies authorization to entities seeking to operate payment systems. Penalties: The RBI can impose penalties up to ₹10 lakh or twice the amount involved in contraventions, whichever is higher. Compounding of Offences: The RBI can compound offences (settle violations without court proceedings) for non-imprisonable offences. Inspection and Supervision: The RBI can inspect payment systems and take corrective actions to ensure compliance.

• Authorization: The RBI grants or denies authorization to entities seeking to operate payment systems.

• Penalties: The RBI can impose penalties up to ₹10 lakh or twice the amount involved in contraventions, whichever is higher.

• Compounding of Offences: The RBI can compound offences (settle violations without court proceedings) for non-imprisonable offences.

• Inspection and Supervision: The RBI can inspect payment systems and take corrective actions to ensure compliance.

• What Does the PSS Act Cover?

• Payment Systems: Includes systems enabling credit card operations, debit card operations, money transfers, and similar operations. Settlement Systems: Covers systems for clearing and settling funds, securities, foreign exchange, and derivatives. Financial Market Infrastructures (FMIs): Includes Central Counterparties (CCPs), Securities Settlement Systems (SSS), and Trade Repositories (TRs).

• Payment Systems: Includes systems enabling credit card operations, debit card operations, money transfers, and similar operations.

• Settlement Systems: Covers systems for clearing and settling funds, securities, foreign exchange, and derivatives.

• Financial Market Infrastructures (FMIs): Includes Central Counterparties (CCPs), Securities Settlement Systems (SSS), and Trade Repositories (TRs).

• Exemptions: The PSS Act does not apply to stock exchangesor clearing corporations established under stock exchanges (Section 34).

Insta links:

• Interoperable-payment-system