Untitled Document
OF
THE PAYMENT AND SETTLEMENTS SYSTEMS ACT, 2007
No. 51 OF 2007
Dated : December 20, 2007
The
following Act of Parliament received the assent of the President on the
20th December, 2007, and is hereby published for general information:-
THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007
No. 51 OF 2007
Dated : December 20, 2007
An
Act to provide for the regulation and supervision of payment systems in India
and to designate the Reserve Bank of India as the authority for that purpose
and for matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Fifty-eighth Year of the Republic of India
as follows:-
CHAPTER I
PRELIMINARY
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1. (1)
This Act may be called the Payment and Settlement Systems Act, 2007.
(2) It
extends to the whole of India.
(3) It
shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint and different dates may
be appointed for different provisions of this Act, and any reference
to the commencement in any such provision of this Act shall be construed
as a reference to the commencement of that provision. |
Short title,
extent and
commencem |
Definitions |
2. (1) In
this Act, unless the context otherwise requires, -
(a) "bank" means, - |
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(i) a
bank included in the Second Schedule to the Reserve Bank of
India Act, 1934;
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2 of 1934 |
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(ii)
a post office savings bank, -
(iii) a
banking company as defined in clause (c) of section 5 of the
Banking Regulation Act, 1949; |
10 of 1949 |
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(iv) a co-operative
bank as defined in clause (cci) of section 5, as inserted by section 56,
of the Banking Regulation Act, 1949; and |
10 of 1949 |
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(v) such
other bank as the Reserve Bank may, by notification, specify for the purposes
of this Act; |
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(b) "derivative"
means an instrument, to be settled at a future date, whose value is
derived from change in interest rate, foreign exchange rate, credit
rating or credit index, price of securities (also called "underlying"),
or any other underlying or a combination of more than one of them and
includes interest rate swaps, forward rate agreements, foreign currency
swaps, foreign currency rupee swaps, foreign currency options, foreign
currency
rupee options or any other instrument, as may be specified by the Reserve
Bank from time to time;
(c) "electronic funds transfer" means any transfer of funds which is
initiated by a person by way of instruction, authorisation or order
to a bank to debit
or credit an account maintained with that bank through electronic means
and includes point of sale transfers, automated teller machine transactions,
direct deposits or withdrawal of funds, transfers initiated by telephone,
internet and card payment;
(d) "gross
settlement system" means a payment system in which each settlement of
funds or securities occurs on the basis of separate or individual instructions;
(e) "netting" means the determination by the system provider of the
amount of money
or securities, due or payable or deliverable, as a result of setting
off or adjusting, the payment obligations or delivery obligations among
the system participants, including the claims and obligations arising
out of the termination by the system provider, on the insolvency or
dissolution or winding up of any system participant or such other
circumstances as the system provider may specify in its rules or regulations
or byelaws
(by whatever name called), of the transactions admitted for settlement
at a future date so that only a net claim be demanded or a net obligation
be owned;
(f) "notification" means a notification published in the Official Gazette;
(g) "payment instruction" means any instrument, authorisation or order
in any form, including electronic means, to effect a payment,-
(i) by
a person to a system participant; or
(ii) by a system participant to another system participant;
(h) "payment obligation" means an indebtedness that is owned by one
system participant to another system participant as a result of clearing
or settlement of one or
more payment instructions relating to funds, securities or foreign exchange
or
derivatives or other transactions;
(i) "payment system" means a system that enables payment to be effected
between a payer and a beneficiary, involving clearing, payment or settlement
service or all of them, but does not include a stock exchange;
Explanation.- For the purposes of this clause, "payment system" includes
the systems
enabling credit card operations, debit card operations, smart card operations,
money transfer operations or similar operations;
(j) "prescribed" means prescribed by regulations made under this Act;
(k) "regulation" means a regulation made under this Act; |
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(l) "Reserve
Bank" means the Reserve Bank of India, constituted under the Reserve Bank
of India Act, 1934; |
2 of 1934 |
18 of 1944 |
(m) "securities"
means the Government securities as defined in the Public Debt Act,
1944 or such other securities as may be notified by the Central Government
from time
to time under that Act; |
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(n) "settlement"
means settlement of payment instructions and includes the settlement
of securities, foreign exchange or derivatives or other transactions which
involve payment obligations;
(o) "systemic risk" means the risk arising from -
(i) the inability of a system participant to meet his payment obligations
under the
payment system as and when they become due; or
(ii) any disruption in the system,
which may cause other participants to fail to meet their obligations when
due and is likely
to have an impact on the stability of the system:
Provided that if any doubt or difference arises as to whether a particular
risk is likely to
have an impact on the stability of the system, the decision of the Reserve
Bank shall be final;
(p) "system participant" means a bank or any other person participating
in payment
system and includes the system provider;
(q) "system provider" means a person who operates an authorised payment
system. |
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2 of 1934
10 of 1949 |
(2) Words
and expressions used, but not defined in this Act and defined in the Reserve
Bank of India Act, 1934 or the Banking Regulation Act, 1949, shall have
the meanings
respectively assigned to them in those Acts. |
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CHAPTER
II
DESIGNATED AUTHORITY AND ITS COMMITTEE |
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3. (1) The
Reserve Bank shall be the designated authority for the regulation and
supervision of payment systems under this Act. |
Designated
authority and
its Committee. |
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(2) The
Reserve Bank may, for the purposes of exercising the powers and performing
the
functions and discharging the duties conferred on it by or under this
Act, by regulation
constitute a committee of its Central Board to be known as the Board for
Regulation
and Supervision of Payment and Settlement Systems.
(3) The Board constituted under sub-section (2) shall consist of the following
members,
namely:-
(a) Governor, Reserve Bank, who shall be the Chairperson of the Board;
(b) Deputy Governors, Reserve Batik, out of whom the Deputy Governor who
is incharge
of the Payment and Settlement Systems, shall be the Vice-Chairperson of
the Board;
(c) Not exceeding three Directors from the Central Board of the Reserve
Bank of India to be nominated by the Governor, Reserve Bank.
(4) The powers and functions of the Board constituted under sub-section
(2), the time and venue of its meetings, the procedure to be followed
in such meetings, (including the quorum at such meetings) and other matters
incidental thereto shall be such as may be prescribed. |
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2 of 1934 |
(5) The
Board for Regulation and Supervision of Payment and Settlement System
constituted under clause (i) of sub-section (2) of section 58 of the Reserve
Bank of India Act, 1934 shall be deemed to be the Board constituted under
this section and continue accordingly until the Board is reconstituted
in accordance with the provisions of this Act and shall be governed by
the rules and regulations made under the Reserve Bank of
India Act, 1934 in so far as they are not inconsistent with the provisions
of this Act. |
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CHAPTER
III
AUTHORISATION OF PAYMENT SYSTEMS |
Payment
system not to
operate
without
authorisation |
4. (1)
No person, other than the Reserve Bank, shall commence or operate a
payment system except under and in accordance with an authorisation
issued by the Reserve Bank under the provisions of this Act:
Provided
that nothing contained in this section shall apply to -
(a) the continued operation of an existing payment system on commencement
of this Act for a period not exceeding six months from such commencement
unless
within such period, the operator of such payment system obtains an authorisation
under this Act or the application for authorisation made under section
7 of this
Act is refused by the Reserve Bank;
(b) any person acting as the duly appointed agent of another person
to whom the payment is due;
(c) a company accepting payments either from its holding company or
any of its subsidiary companies or from any other company which is also
a subsidiary of the same holding company;
(d) any other person whom the Reserve Bank may, after considering the
interests
of monetary policy or efficient operation of payment systems, the size
of any payment system or for any other reason, by notification, exempt
from the
provisions of this section.
(2) The Reserve Bank may, under sub-section (1) of this section, authorise
a company or
corporation to operate or regulate the existing clearing houses or new
clearing houses of banks in order to have a common retail clearing house
system for the banks throughout the country:
Provided, however, that not less than fifty-one per cent. of the equity
of such company or corporation shall be held by public sector banks. |
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Explanation.-For
the purposes of this clause, "public sector banks" shall include a "corresponding
new bank", "State Bank of India" and "subsidiary bank" as defined in
section 5 of the Banking Regulation Act, 1949. |
10 of 1949 |
Application
for
authorisation |
5. (1) Any
person desirous of commencing or carrying on a payment system may apply
to
the Reserve Bank for an authorisation under this Act.
(2) An application under sub-section (1) shall be made in such form and
in such manner and shall be accompanied by such fees as may be prescribed. |
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Inquiry
by the
Reserve Bank |
6. After
the receipt of an application under section 5, and before an authorisation
is issued
under this Act, the Reserve Bank may make such inquiries as it may consider
necessary for the purpose of satisfying itself about the genuineness of
the particulars furnished by the applicant, his capacity to operate the
payment system, the credentials of the
participants or for any other reason and when such an inquiry is conducted
by any person
authorised by it in this behalf, it may require a report from such person
in respect of the
inquiry. |
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Issue or
refusal
of authorisation |
7. (1) The
Reserve Bank may, if satisfied, after any inquiry under section 6 or otherwise,
that the application is complete in all respects and that it conforms
to the provisions of this Act and the regulations issue an authorisation
for operating the payment system
under this Act having regard to the following considerations, namely:-
(i) the need for the proposed payment system or the services proposed
to be undertaken by it;
(ii) the technical standards or the design of the proposed payment system;
(iii) the terms and conditions of operation of the proposed payment system
including any security procedure;
(iv) the manner in which transfer of funds may be effected within the
payment system;
(v) the procedure for netting of payment instructions effecting the payment
obligations under the payment system;
(vi) the financial status, experience of management and integrity of the
applicant;
(vii) interests of consumers, including the terms and conditions governing
their relationship with payment system providers;
(viii) monetary and credit policies; and
(ix) such other factors as may be considered relevant by the Reserve Bank.
(2) An authorisation issued under sub-section (1) shall be in such form
as may be prescribed and shall-
(a) state the date on which it takes effect;
(b) state the conditions subject to which the authorisation shall be in
force;
(c) indicate the payment of fees, if any, to be paid for the authorisation
to be in force;
(d) if it considers necessary, require the applicant to furnish such security
for the proper conduct of the payment system under the provisions of this
Act;
(e) continue to be it force till the authorisation is revoked.
(3) Where the Reserve Bank considers that the application for authorisation
should be
refused, it shall give the applicant a written notice to that effect stating
the reasons for the refusal:
Provided that no such application shall be refused unless the applicant
is given a reasonable opportunity of being heard.
(4) Every application for authorisation shall be processed by the Reserve
Bank as soon
as possible and an endeavour shall be made to dispose of such application
within six months from the date of filing of such application. |
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8. (1) If
a system provider,- |
Revocation
of
authorisation |
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(i) contravenes
any provisions of this Act, or
(ii) does not comply with the regulations, or
(iii) fails
to comply with the orders or directions issued by the designated authority,
or
(iv) operates the payment system contrary to the conditions subject
to which the authorisation was issued,
the Reserve Bank may, by order, revoke the authorisation given to such
system provider under this Act:
Provided that no order of revocation under sub-section (1) shall be
made -
(i) except after giving the system provider a reasonable opportunity
of being heard; and
(ii) without prejudice to the direction of the Reserve Bank to the system
provider that
the operation of the payment system shall not be carried out till the
order of revocation is issued.
(2) Nothing contained in sub-section (1) shall apply to a case where
the Reserve Bank
considers it necessary to revoke the authorisation given to a payment
system in the interest of the monetary policy of the country or for
any other reasons to be specified by
it in the order.
(3) The order of revocation issued under sub-section (1) shall include
necessary provisions to protect and safeguard the interests of persons
affected by such order of revocation
(4) Where a system provider becomes insolvent or dissolved or wound
up, such system
provider shall inform that fact to the Reserve Bank and thereupon the
Reserve Bank shall take such steps as deemed necessary to revoke the
authorisation issued to such system provider to operate the payment
system. |
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Appeal to
the
Central
Government. |
9. (1) Any
applicant for an authorisation whose application for the operation of
the payment
system is refused under sub-section (3) of section 7 or a system provider
who is
aggrieved by an order of revocation under section 8 may, within thirty
days from the date
on which the order is communicated to him, appeal to the Central Government.
(2) The Central Government shall endeavour to dispose of an appeal under
sub-section (1) within a period of three months.
(3) The decision of the Central Government on the appeal under sub-section
(1) shall be
final. |
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CHAPTER
IV
REGULATION AND SUPERVISION BY THE RESERVE BANK |
Power to
determine
standards |
10. (1)
The Reserve Bank may, from time to time, prescribe"
Power to determine standards (a) the format of payment instructions and
the size and shape of such instructions;
(b) the timings to be maintained by payment systems;
(c) the manner of transfer of funds within the payment system, either
through paper,
electronic means or in any other manner, between banks or between banks
and
other system participants;
(d) such other standards to be complied with the payment systems generally;
(e) the criteria for membership of payment systems including continuation,
termination and rejection of membership;
(f) the conditions subject to, which the system participants shall participate
in such
fund transfers and the rights and obligations of the system participants
in such funds.
(2) Without prejudice to the provisions of sub-section (1), the Reserve
Bank may, from
time to time, issue such guidelines, as it may consider necessary for
the proper and
efficient management of the payment systems generally or with reference
to any
particular payment system. |
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Notice of
change in
the payment
system |
11. (1)
No system provider shall cause any change in the system which would
affect the
structure or the operation of the payment system without -
(a) the
prior approval of the Reserve Bank; and
(b) giving
notice of not less than thirty days to the system participants after
the
approval of the Reserve Bank:
Provided that in the interest of monetary policy of the country or in
public interest, the Reserve Bank may permit the system provider to
make any changes in a payment system without giving notice to the system
participants under clause (b) or requiring
the system provider to give notice for a period longer than thirty days.
(2) Where the Reserve Bank has any objection, to the proposed change
for any reason, it shall communicate such objection to the systems provider
within two
weeks of receipt of the intimation of the proposed changes from the
system provider.
(3) The system provider shall, within a period of two weeks of the receipt
of the objections from the Reserve Bank forward his comments to the
Reserve Bank and the proposed changes may be effected only after the
receipt of approval from the Reserve Bank. |
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Power to
call for
returns,
documents or
other information |
12. The
Reserve Bank may call for from any system provider such returns or documents
as it may require or other information in regard to the operation of his
payment system at such intervals, in such form and in such manner, as
the Reserve
Bank may require from time to time or as may be prescribed and such order
shall be complied with. |
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Access to
information |
13. The
Reserve Bank shall have right to access any information relating to the
operation of any payment system and system provider and all the system
participants shall provide access to such information to the Reserve Bank. |
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14. Any
officer of the Reserve Bank duly authorised by it in writing in this behalf,
may
for ensuing compliance with the provisions of this Act or any regulations,
enter any premises where a payment system is being operated and may inspect
any equipment, including any computer system or other documents situated
at such premises and call upon any employee of such system provider or
participant thereof or any other person working in such premises to furnish
such information or documents as may be
required by such officer. |
Power to
enter and
inspect. |
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15. (1)
Subject to the provisions of sub-section (2), any document or information
obtained by the Reserve Bank under sections 12 to 14 (both inclusive)
shall be kept confidential.
(2) Notwithstanding
anything contained in sub-section (1), the Reserve Bank may disclose
any document or information obtained by it under sections 12 to 14 (both
inclusive) to any person to whom the disclosure of such document or
information is
considered necessary for protecting the integrity, effectiveness or
security of the
payment system, or in the interest of banking or monetary policy or
the operation of
the payment systems generally or in the public interest. |
Information,
etc.,
to be confidential |
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16. The
Reserve Bank may, for the purpose of carrying out its functions under
this Act,
conduct or get conducted audits and inspections of a payment system or
participants thereof and it shall be the duty of the system provider and
the system participants to assist the Reserve Bank to carry out such audit
or inspection, as the case may be. |
Power to
carry out
audit and
inspection |
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17. Where
the Reserve Bank is of the opinion that, -
(a) a payment
system or a system participant is engaging in, or is about to engage
in, any act, omission or course of conduct that results, or is likely
to result, in systemic risk being inadequately controlled; or
Power to issue directions.
(b) any action under clause (a) is likely to affect the payment system,
the monetary policy or the credit policy of the country,
the Reserve Bank may issue directions in writing to such payment system
or system
participant requiring it, within such time as the Reserve Bank may specify
-
(i) to cease and desist from engaging in the act, omission or course
of conduct or to ensure the system participants to cease and desist
from the act, omission or course of conduct; or
(ii) to perform such acts as may be necessary, in the opinion of the
Reserve Bank, to remedy the situation. |
Power to
issue
directions. |
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18. Without
prejudice to the provisions of the foregoing, the Reserve Bank may, if
it is
satisfied that for the purpose of enabling it to regulate the payment
systems or in the
interest of management or operation of any of the payment systems or in
public interest, it is necessary so to do, lay down policies relating
to the regulation of payment systems including electronic, non-electronic,
domestic and international payment systems affecting domestic transactions
and give such directions in writing as it may consider necessary to system
providers or the system participants or any other person
either generally or to any such agency and in particular, pertaining to
the conduct of
business relating to payment systems. |
Power of
Reserve
Bank to give
directions
generally. |
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19. Every
person to whom a direction has been issued by the Reserve Bank under this
Act shall comply with such direction without any delay and a report of
compliance
shall be furnished to the Reserve Bank within the time allowed by it. |
Directions
of
Reserve Bank to
be complied with. |
CHAPTER
V
RIGHTS AND DUTIES OF A SYSTEM PROVIDER |
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20. Every
system provider shall operate the payment system in accordance with the
provisions of this Act, the regulations, the contract governing the relationship
among the system participants, the rules and regulations which deal with
the operation of the payment system and the conditions subject to which
the authorisation is issued, and the directions given by the Reserve Bank
from time to time. |
System provider
to
act in accordance
with the Act,
regulations, etc. |
Duties of
a
system provider |
21. (1)
Every system provider shall disclose to the existing or potential system
participants, the terms and conditions including the charges and the limitations
of
liability under the payment system, supply them with copies of the rules
and regulations governing the operation of the payment system, netting
arrangements and
other relevant documents.
(2) It shall be the duty of every system provider to maintain the standards
determined under this Act. |
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Duty to
keep
documents in the
payment system
confidential |
22. (1)
A system provider shall not disclose to any other person the existence
or contents of any document or part thereof or other information given
to him by a system participant, except where such disclosure is required
under the provisions of this Act
or the disclosure is made with the express or implied consent of the system
participant concerned or where such disclosure is in obedience to the
orders passed by a court of competent jurisdiction or a statutory authority
in exercise of the powers conferred by a
statute. |
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(2) The
provisions of the Bankers" Book Evidence Act, 1891 shall apply in relation
to the information or documents or other books in whatever form maintained
by the
system provider. |
18 of 1991. |
Settlement
and
netting. |
23. (1)
The payment obligations and settlement instructions among the system participants
shall be determined in accordance with the gross or netting procedure,
as the case may be, approved by the Reserve Bank while issuing authorisation
to a
payment system.
(2) Where the rules providing for the operation of a payment system indicates
a procedure for the distribution of losses between the system participants
and the
payment system, such procedure shall have effect notwithstanding anything
to the contrary contained in any other law for the time being in force.
(3) A settlement effected under such procedure shall be final and irrevocable. |
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(4) Where
a system participant is declared by a court of competent jurisdiction
as insolvent or is dissolved or wound up, then notwithstanding anything
contained in the Companies Act, 1956 or the Banking Regulation Act,
1949 or any other law for the
time being in force, the order of adjudication or dissolution or winding
up, as the case
may be, shall not affect any settlement that has become final and irrevocable
and the
right of the system provider to appropriate any collaterals contributed
by the system
participant towards its settlement or other obligations in accordance
with the rules, regulations or bye-laws of such system provider.
Explanation.
- For the removal of doubts, it is hereby declared that the settlement,
whether gross or net, referred to in this section is final and irrevocable
as soon as the money, securities, foreign exchange or derivatives or
other transactions payable as a
result of such settlement is determined, whether or not such money,
securities or
foreign exchange or derivatives or other transactions is actually paid. |
1 of 1956
10 of 1949. |
CHAPTER
VI
SETTLEMENT OF DISPUTES |
Settlement
of
disputes. |
24. (1)
The system provider shall make provision in its rules or regulations
for creation
of panel consisting of not less than three system participants other
than the system
participants who are parties to the dispute to decide the disputes between
system participants in respect of any matter connected with the operation
of the payment
system.
(2) Where any dispute in respect of any matter connected with the operation
of the payment system arises between two or more system participants,
the system provider shall refer the dispute to the panel referred to
in sub-section (1).
(3) Where
any dispute arises between any system participant and the system provider
or between system providers or where any of the system participants
is not satisfied with the decision of the panel referred to in sub-section
(1), the dispute shall be referred to the Reserve Bank.
(4) The dispute referred to the Reserve Bank for adjudication under
sub-section (3)
shall be disposed of by an officer of the Reserve Bank generally or
specially authorized in this behalf and the decision of the Reserve
Bank shall be final and binding.
(5) Where a dispute arises between the Reserve Bank, while acting in
its capacity
as system provider or as system participant, and another system provider
or system participant, the matter shall be referred to the Central Government
which may
authorise an officer not below the rank of Joint Secretary for settlement
of the dispute and the decision of such officer shall be final. |
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25. (1)
Where an electronic funds transfer initiated by a person from an account
maintained by him cannot be executed on the ground that the amount of
money
standing to the credit of that account is insufficient to honour the
transfer instruction
or that it exceeds the amount arranged to be paid from that account
by an agreement
made with a bank, such person shall be deemed to have committed an offence
and
shall, without prejudice to any other provisions of this Act, be punished
with imprisonment for a term which may extent to two years, or with
fine which may extend to twice the amount of the electronic funds transfer,
or with both:
Provided
that nothing contained in this section shall apply unless -
(a) the electronic funds transfer was initiated for payment of any amount
of money to another person for the discharge, in whole or in part, of
any debt or other liability;
(b) the electronic funds transfer was initiated in accordance with the
relevant procedural guidelines issued by the system provider;
(c) the beneficiary makes a demand for the payment of the said amount
of money by giving a notice in writing to the person initiating the
electronic funds
transfer within thirty days of the receipt of information by him from
the bank concerned regarding the dishonour of the electronic funds transfer;
and
(d) the person initiating the electronic funds transfer fails to make
the payment of the said money to the beneficiary within fifteen days
of the receipt
of the said notice.
(2) It shall be presumed, unless the contrary is proved, that the electronic
funds transfer was initiated for the discharge, in whole or in part,
of any debt or other liability.
(3) It shall not be a defence in a prosecution for an offence under
sub-section (1) that the person, who initiated the electronic funds
transfer through an instruction, authorisation, order or agreement,
did not have reason to believe at
the time of such instruction, authorisation, order or agreement that
the credit of his account is insufficient to effect the electronic funds
transfer.
(4) The Court shall, in respect of every proceeding under this section,
on production of a communication from the bank denoting the dishonour
of
electronic funds transfer, presume the fact of dishonour of such electronic
funds transfer, unless and until such fact is disproved. |
Dishonour
of
electronic funds
transfer for
insufficiency, etc.,
of funds in the
account. |
26 of 1881. |
(5) The
provisions of Chapter XVII of the Negotiable Instruments Act, 1881 shall
apply to the dishonour of electronic funds transfer to the extent the
circumstances admit.
Explanation. - For the purposes of this section, "debt or other liability"
means a legally enforceable debt or other liability, as the case may be. |
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CHAPTER
VII
OFFENCES AND PENALTIES |
Penalties. |
26. (1)
Where a person contravenes the provisions of section 4 or fails to comply
with the terms and conditions subject to which the authorisation has been
issued under section 7,
he shall be punishable with imprisonment for a term which shall not be
less than one
month but which may extend to ten years or with fine which may extend
to one crore
rupees or with both and with a further fine which may extend to one lakh
rupees for every
day, after the first during which the contravention or failure to comply
continues.
(2) Whoever in any application for authorisation or in any return or other
document or on any information required to be furnished by or under, or
for the purpose of, any provision of this Act, wilfully makes a statement
which is false in any material particular, knowing it to be false or wilfully
omits to make a material statement, shall be punishable with imprisonment
for a term which may extend to three years and shall also be liable to
fine which shall not be less than ten lakh rupees and which may extend
to fifty lakh rupees.
(3) If any person fails to produce any statement, information, returns
or other documents, or to furnish any statement, information, returns
or other documents, which under section 12 or under section 13, it is
his duty to furnish or to answer any question relating to the operation
of a payment system which is required by an officer making
inspection under section 14, he shall be punishable with fine which may
extend to ten lakh rupees in respect of each offence and if he persists
in such refusal, to a further fine which may extend to twenty-five thousand
rupees for every day for which the offence
continues.
(4) If any person discloses any information, the disclosure of which is
prohibited under section 22, he shall be punishable with imprisonment
for a term which may extend to six months, or with fine which may extend
to five lakh rupees or an amount equal to
twice the amount of the damages incurred by the act of such disclosure,
whichever is
higher.or with both.
(5) Where a direction issued under this Act is not complied with within
the period
stipulated by the Reserve Bank or where no such period is stipulated,
within a reasonable
time or where the penalty imposed by the Reserve Bank under section 30
is not paid
within a period of thirty days froth the date of the order, the system
provider or the system
participant which has failed to comply with the direction or to pay the
penalty shall be
punishable with imprisonment for a term which shall not be less than one
month but which may extend to ten years, or with fine which may extend
to one crore rupees or with both and where the failure to comply with
the direction continues, with further fine which
may extend to one lakh rupees for every day, after the first during which
the contravention
continues.
(6) If any provision of this Act is contravened, or if any default is
made in complying with any other requirement of this Act, or of any regulation,
order or direction made or given or condition imposed thereunder and in
respect of which no penalty has been
specified, then, the person guilty of such contravention or default, as
the case may be, shall be punishable with fine which may extend to ten
lakh rupees and where a contravention or default is a continuing one,
with a further fine which may extend to
twenty-five thousand rupees for every day, after the first during which
the contravention or
default continues. |
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Offences
by
companies. |
27. (1)
Where a person committing a contravention of any of the provisions of
this Act or
any regulation, direction or order made thereunder is a company, every
person who, at the
time of the contravention, was in-charge of, and was responsible to,
the company for the
conduct of business of the company, as well as the company, shall be
guilty of the
contravention and shall be liable to be proceeded against and punished
accordingly :
Provided that nothing contained in this sub-section shall render any
such person liable to punishment if he proves that the contravention
took place without his knowledge or that he exercised all due diligence
to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a contravention
of
any of the provisions of this Act or of any regulation, direction or
order made thereunder has been committed by a company and it is proved
that the contravention has taken place with the consent or connivance
of, or is attributable to any neglect on the part of any director, manager,
secretary or other officer of the company, such director, manager,
secretary or other officer shall also be deemed to be guilty of the
contravention and shall be
liable to be proceeded against and punished accordingly.
Explanation. - For the purposes of this section,-
(a) "company" means any body corporate and includes a firm
or other association of individuals; and
(b) "director",
in relation to a firm, means a partner in the firm. |
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28. (1)
No court shall take cognizance of an offence punishable under this Act
except upon a complaint in writing made by an officer of the Reserve
Bank generally or specially authorised
by it in writing in this behalf, and no court, lower than that of a
Metropolitan Magistrate or a
Judicial Magistrate of the first class shall try any such offence:
Provided
that the Court may take cognizance of an offence punishable under section
25
upon a complaint in writing made by the person aggrieved by the dishonour
of the electronic funds transfer. |
Cognizance
of
offences |
2 of 1974 |
(2) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973, a Magistrate
may dispense with the personal attendance of the officer of the Reserve
Bank filing the complaint, but the Magistrate may, in his discretion,
at any stage of the proceedings, direct the personal attendance of the
complainant. |
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29. A court
imposing any fine under this Act may direct that the whole or any part
thereof
shall be applied in, or towards payment of, the costs of the proceedings.
|
Application
of
fine. |
|
30. (1)
Notwithstanding anything contained in section 26, if a contravention
or default of the
nature referred to in sub-section (2) or sub-section (6) of section
26, as the case may be, the
Reserve Bank may impose on the person contravening or committing default
a penalty not
exceeding five lakh rupees or twice the amount involved in such contravention
or default
where such amount is quantifiable, whichever is more, and where such
contravention or
default is a continuing one, a further penalty which may extend to twenty-five
thousand
rupees for every day after the first during which the contravention
or default continues.
(2) For
the purpose of imposing penalty under sub-section (1), the Reserve Bank
shall
serve a notice on the defaulter requiring him to show cause why the
amount specified in the
notice should not be imposed as a penalty and a reasonable opportunity
of being heard shall
also be given to such defaulter.
(3) Any penalty imposed by the Reserve Bank under this section shall
be payable within
a period of thirty days from the date on which notice issued by the
Reserve Bank demanding
payment of the sum is served on the defaulter and, in the event of failure
of the person to pay
the sum within such period, may be recovered on a direction made by
the principal civil court
having jurisdiction in the area where the registered office of the defaulter
company or the
official business of the person is situated:
Provided that no such direction shall be made, except on an application
made by an officer of
the Reserve Bank authorised by it in this behalf.
(4) The Reserve Bank may recover the amount of penalty by debiting the
current account, if any, of the defaulter or by liquidating the securities
held to the credit of the defaulter or in accordance with the provisions
of this Act.
(5) The court which makes a direction under sub-section (3) shall issue
a certificate
specifying the sum payable by the defaulter and every such certificate
shall be enforceable in
the same manner as it were a decree made by the court in a civil suit.
(6) Where any complaint has been filed against any person in any court
in respect of the
contravention or default of the nature referred to in sub-section (2),
or, as the case may be,
sub-section (4) of section 26, then, no proceeding for the imposition
of any penalty on the
person shall be taken under this section. |
Power of
Reserve Bank
to impose
fines. |
Power to
compound
offences. |
31. (1)
Notwithstanding anything contained in the Code of Criminal Procedure,
2 of 1973, any
offence punishable under this Act for any contravention, not being an
offence punishable with
imprisonment only, or with imprisonment and also with fine, may, on
receipt of an application
from the person committing such contravention either before or after
the institution of any
proceeding, be compounded by an officer of the Reserve Bank duly authorised
by it in this
behalf.
(2) Where
a contravention has been compounded under sub-section (1), no proceeding
or
further proceeding, as the case may be, shall be initiated or continued,
as the case may be,
against the person committing such contravention under that section,
in respect of the
contravention so compounded. |
2 of 1974. |
CHAPTER
VIII
MISCELLANEOUS |
Act to have
overriding effect. |
32. The
provisions of this Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in force. |
|
Mode of
recovery
of penalty. |
33. (1)
The penalty imposed on the defaulter by the Reserve Bank under section
30
may be recovered by issuing a notice to any person from whom any amount
is due to
the defaulter, by requiring such person to deduct from the amount payable
by him to the defaulter, the amount payable to the Reserve Bank by way
of penalty and pay to the Reserve Bank.
(2) Save as otherwise provided in this section, every person to whom a
notice is issued under this sub-section shall be bound to comply with
such notice, and, in
particular, where such notice i issued to a post office, bank or an insurer,
it shall not be necessary for any passbook, deposit receipt, policy or
any other document to be produced for the purpose of any entry, endorsement
or the like being made before
payment is made notwithstanding that any rule, practice or requirement
to the contrary.
(3) Any claim respecting any property in relation to which a notice under
this subsection
has been issued arising after the date of the notice shall be void as
against any demand contained in the notice.
(4) Where a. person to whom the notice under this sub-section is sent
objects to it by a statement on oath that the sum demanded or any part
thereof is not due to the defaulter or that he does not hold any money
for or on account of the defaulter, then, nothing contained in this sub-section
shall be deemed to require such person to pay any such sum or part thereof,
as the case may be, but if it is discovered that such
statement was false in any material particular, such person shall be personally
liable
to the Reserve Bank to the extent of his own liability to the defaulter
on the date of the notice, or to the extent of the penalty imposed on
the defaulter by the Reserve Bank, whichever is less.
(5) The Reserve Bank may at any time or from time to time, amend or revoke
any notice issued under this section or extend the time for making the
payment in
pursuance of such notice.
(6) The Reserve Bank shall grant a receipt for any amount paid to it in
compliance with a notice issued under this section and the person so paying
shall be fully
discharged frog his liability to the defaulter to the extent of the amount
so paid.
(7) Any person discharging any liability to the defaulter after the receipt
of a notice under this section shall be personally liable to the Reserve
Bank to the extent of his own liability to the defaulter so discharged
or to the extent of the penalty imposed on
the defaulter by the Reserve Bank, whichever is less.
(8) If the person to whom the notice under this section is sent fails
to make payment in pursuance thereof to the Reserve Bank, he shall be
deemed to be the defaulter in respect of the amount specified in the notice
and further proceedings may
be taken against him for the realisation of the amount as if it were an
arrear due from
him in the manner provided in this section.
Explanation. - For the purposes of this section, "defaulter" means any
person or system provider or system participant on whom the Reserve Bank
has imposed a
penalty under section 30. |
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34. Nothing
contained in this Act shall apply to stock exchanges or the clearing corporations
of the stock exchanges. |
Act not
to apply to
stock exchanges
or clearing
corporations of
stock exchanges. Certain persons
deemed to be
public servants |
45 of 1860 |
35. Every
officer of the Reserve Bank who has been entrusted with any power under,
this Act, shall be deemed to be a public servant within the meaning of
section 21 of the Indian Penal Code. |
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36. No suit
or other legal proceedings shall lie against the Central Government, the
Reserve Bank, or any officer thereof for any damage caused or likely to
be caused by
anything which is in good faith done or intended to be done in pursuance
of this Act,
any regulations, order or direction made or given thereunder. |
Protection
of
action taken in
good faith. |
|
37. (1)
If any difficulty arises in giving effect to the provisions of this
Act, the Central
Government may, by order published in the Official Gazette, make such
provision is
not inconsistent with the provisions of this Act as appear to it to
be necessary or expedient for removing the difficulty:
Provided
that no order shall be made under this section after the expiry of a
period of two years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may
be after it is made, before each House of Parliament. |
Power to
remove
difficulties |
|
38. (1)
The Reserve Bank may, by notification, make regulations consistent with
this Act to carry out the provisions of this Act.
(2) In
particular, and without prejudice to the generality of the foregoing
provision, such regulations may provide for all or any of the following
matters, namely:-
Power of Reserve Bank to make
regulations.
(a) the
powers and functions of the Committee constituted under sub-section
(2), the
time and venue of its meetings and the procedure to be followed by it
at its meetings (including the quorum at such meetings) under sub-section
(4) of section
3;
(b) the form and manner in which an application for authorisation for
commencing or carrying on a payment system shall be made and the fees
which shall accompany such application under sub-section (2) of section
5;
(c) the form in which an authorisation to operate a payment system under
this
Act shall be issued under sub-section (2) of section 7;
(d) the format of payment instructions and other matters relating to
determination of standards to be complied with by the payment systems
under
sub-section (1) of section 10;
(e) the intervals, at which and the form and manner in which the information
or returns required by the Reserve Bank shall be furnished under section
12;
(f) such other matters as are required to be, or may be, prescribed.
(2) Any regulation made under this section shall have effect from such
earlier or later date (nor earlier than the date of commencement of
this Act) as may be specified in the regulation.
(3) Every regulation shall, as soon as may be after it is made by the
Reserve Bank, be forwarded to the Central Government and that Central
Government shall cause a copy of the same to be laid before each House
of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following
the session or the successive sessions aforesaid, both Houses agree
in making any modification in the regulation, or both Houses agree that
the regulation should not be made, the regulation shall, thereafter,
have effect only in such modified form or be of no effect, as the case
may be; so, however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done under
that regulation. |
Power of
Reserve
Bank to make
regulations. |
(K.N.
Chaturvedi)
Secy to the Govt. of India
|