THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007 
____________ 

ARRANGEMENT OF SECTIONS 
____________ 

CHAPTER I 

PRELIMINARY 

SECTIONS 

1.  Short title, extent and commencement. 
2.  Definitions. 

CHAPTER II 

DESIGNATED AUTHORITY  

3.  Designated authority. 

CHAPTER III 

AUTHORISATION OF PAYMENT SYSTEMS 

4.  Payment system not to operate without authorisation. 
5.  Application for authorisation. 
6.  Inquiry by the Reserve Bank. 
7.  Issue or refusal of authorisation. 
8.  Revocation of authorisation. 
9.  Appeal to the Central Government. 

CHAPTER IV 

REGULATION AND SUPERVISION BY THE RESERVE BANK 

10.  Power to determine standards. 
10A. Bank, etc., not to impose charge for using electronic modes of payment. 
11.  Notice of change in the payment system. 
12.  Power to call for returns, documents or other information. 
13.  Access to information. 
14.  Power to enter and inspect. 
15.  Information, etc., to be confidential. 
16.  Power to carry out audit and inspection. 
17.  Power to issue directions. 
18.  Power of Reserve Bank to give directions generally. 
19.  Directions of Reserve Bank to be complied with. 

CHAPTER V 

RIGHTS AND DUTIES OF A SYSTEM PROVIDER 

20.  System provider to act in accordance with the Act, regulations, etc. 
21.  Duties of a system provider. 
22.  Duty to keep documents in the payment system confidential. 
23.  Settlement and netting. 
23A. Protection of funds collected from customers. 

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CHAPTER VI 
SETTLEMENT OF DISPUTES 

SECTIONS 

24.  Settlement of disputes. 
25.  Dishonour of electronic funds transfer for insufficiency, etc., of funds in the account. 

CHAPTER VII 

OFFENCES AND PENALTIES 

26.  Penalties. 
27.  Offences by companies. 
28.  Cognizance of offences. 
29.  Application of fine. 
30.  Power of Reserve Bank to impose fines. 
31.  Power to compound offences. 

CHAPTER VIII 

MISCELLANEOUS 

32.  Act to have overriding effect. 
33.  Mode of recovery of penalty. 
34.  Act not to apply to stock exchanges or clearing corporations of stock exchanges. 
34A. Act to apply to designated trade repository and issuer. 
34B. Powers of Reserve Bank not to apply to International Financial Services Centre. 
35.  Certain persons deemed to be public servants. 
36.  Protection of action taken in good faith. 
37.  Power to remove difficulties. 
38.  Power of Reserve Bank to make regulations. 

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THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007 

ACT NO. 51 OF 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:— 

[20th December, 2007.] 

CHAPTER I 

PRELIMINARY 

1. Short title, extent and commencement.—(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  date1  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. 

2. Definitions.—(1) In this Act, unless the context otherwise requires,— 

(a) ―bank‖ means,— 

(i)  a  bank  included  in  the  Second  Schedule  to  the  Reserve  Bank  of  India  Act,  1934(2  of 

1934); 

(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); 

(iv) a co-operative bank as defined in clause (cci) of section 5, as inserted by section 56 of the 

Banking Regulation Act, 1949 (10 of 1949); and 

(v) such other bank as the Reserve Bank may, by notification, specify for the purposes of this 

Act; 

(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; 

2[(da)―issuer‖  means  a  person  who  issues  a  legal  entity  identifier  or  such  other  unique 
identification (by whatever name called), as may be specified by the Reserve Bank from time to time; 

1. 12th August, 2008, vide notification No. S.O. 2032(E), dated 12th August, 2008, see Gazette of India, Extraordinary, Part II, 

sec. 3(ii). 

2. Ins. by Act 18 of 2015, s. 2 (w.e.f. 1-6-2015). 

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(db) ―legal entity identifier‖ means a unique identity code assigned to a person by an issuer for 
the  purpose  of  identifying  that  person  in  such  derivatives  or  financial  transactions,  as  may  be 
specified by the Reserve Bank from time to time;] 

(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  bye-laws  (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; 

(l) ―Reserve Bank‖ means the Reserve Bank of India, constituted under the Reserve Bank of India 

Act, 1934 (2 of 1934); 

(m) ―securities‖ means the Government securities as defined in the Public Debt Act, 1944 (18 of 
1944) or such other securities as may be notified by the Central Government from time to time under 
that Act; 

(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 a payment system and 

includes the system provider; 

(q) ―system provider‖ means a person who operates an authorised payment system; 

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1[(r)―trade  repository‖  means  a  person  who  is  engaged  in  the  business  of  collecting,  collating, 
storing,  maintaining,  processing  or  disseminating  electronic  records  or  data  relating  to  such 
derivatives or financial transactions, as may be specified by the Reserve Bank from time to time.] 

(2) Words and expressions used, but not defined in this Act and defined in the Reserve Bank of India 
Act,  1934  (2  of  1934)  or  the  Banking  Regulation  Act,  1949  (10  of  1949),  shall  have  the  meanings 
respectively assigned to them in those Acts. 

2[CHAPTER II 

DESIGNATED AUTHORITY  

3. Designated authority.—(1) The Reserve Bank shall be the designated authority for the regulation 

and supervision of payment systems under this Act. 

(2)  The  Reserve  Bank  shall  exercise  the  powers,  perform  the  functions  and  discharge  the  duties 

conferred on it under this Act through a Board to be known as the ―Payments Regulatory Board‖.  

(3) The Board shall consist of the following members, namely:— 

(a) the Governor of the Reserve Bank–Chairperson, ex officio; 

(b) the Deputy Governor of the Reserve Bank in-charge of the Payment and Settlement Systems-

Member, ex officio; 

(c)  one officer of the Reserve Bank to be nominated by the Central Board of the Reserve Bank-

Member, ex officio; and 

(d) three persons to be nominated by the Central Government-Members. 

(4) The powers and functions of the Board  referred to in sub-section (2), the time and  venue of its 
meetings, the procedures to be followed in such meetings (including the quorum at such meetings) and 
other matters incidental thereto shall be such as may be prescribed.] 

1. Ins. by Act 18 of 2015, s. 2 (w.e.f. 1-6-2015). 

2. Subs. by Finance Act 2017, s. 152, for the following :- 

―CHAPTER II 

DESIGNATED AUTHORITY AND ITS COMMITTEE 

3. Designated  authority and its Committee.—(1) The Reserve  Bank shall be the designated authority  for the regulation 

and supervision of payment systems under this Act. 

(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  Bank,  out  of  whom  the  Deputy  Governor  who  is  in-charge  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. 

(5)  The  Board  for  Regulation  and  Supervision  of  Payment  and  Settlement  Systems  constituted  under  clause  (i)  of  sub-
section (2) of section 58 of the Reserve Bank of India Act, 1934 (2 of 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 

4. Payment system not to operate without authorisation.—(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. 

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). 

5.  Application  for  authorisation.—(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. 

6. Inquiry by the Reserve Bank.—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. 

7.  Issue  or  refusal  of  authorisation.—(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; 

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(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 in 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. 

8. Revocation of authorisation.—(1) If a system provider,— 

(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. 

9. Appeal to the Central Government.—(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. 

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(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. 

CHAPTER IV 

REGULATION AND SUPERVISION BY THE RESERVE BANK 

10. Power to determine standards.—(1) The Reserve Bank may, from time to time, prescribe— 

(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. 

1[10A. Bank, etc., not to impose charge for using electronic modes of payment.—Notwithstanding 
anything contained in this Act, no bank or system provider shall  impose, whether directly or indirectly, 
any  charge  upon  a  person  making  or  receiving  a  payment  by  using  the  electronic  modes  of  payment 
prescribed under section 269SU of the Income-tax Act, 1961 (43 of 1961).] 

11. Notice of change in the payment system.—(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. 

12. Power to call for returns, documents or other information.—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. 

1. Ins. by Act 23 of 2019, s. 204 (w.e.f. 1-11-2019). 

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13. Access to information.—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. 

14. Power to enter and inspect.—Any officer of the Reserve Bank duly authorised by it in writing in 
this  behalf,  may  for  ensuring  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. 

15.  Information,  etc.,  to  be  confidential.—(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. 

16. Power to carry out audit and inspection.—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. 

17. Power to issue directions.—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 

(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. 

18. Power of Reserve Bank to give directions generally.—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. 

19. Directions of Reserve Bank to be complied with.—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. 

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CHAPTER V 

RIGHTS AND DUTIES OF A SYSTEM PROVIDER 

20. System provider to act in accordance with the Act, regulations, etc.—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. 

21.  Duties  of  a  system  provider.—(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. 

22. Duty to keep documents in the payment system confidential.—(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. 

(2) The provisions of the Bankers’ Book Evidence Act, 1891(18 of 1991) shall apply in relation to the 

information or documents or other books in whatever form maintained by the system provider. 

23.  Settlement  and  netting.—(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 
maybe, approved by the Reserve Bank while issuing authorisation to a payment system 1[under section 7, 
or, such gross or netting procedure as may be approved by it under any other provisions of this Act]. 

(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. 
2[(4) Where, by an order of a court, Tribunal or authority–– 

(a) a system participant is declared as insolvent or is dissolved or wound up; or 

(b)  a  liquidator  or  receiver  or  assignee  (by  whatever  name  called),  whether  provisional  or 
otherwise,  is  appointed  in  a  proceeding  relating  to  insolvency  or  dissolution  or  winding  up  of  a 
system participant, 

then,  notwithstanding  anything  contained  in  the  Banking  Regulation  Act,  1949  (10  of  1949)  or  the 
Companies  Act,  1956  (1  of  1956)  or  the  Companies  Act,  2013  (18  of  2013)  3[or  the  Insolvency  and 
Bankruptcy  Code,  2016]  or  any  other  law  for  the  time  being  in  force,  such  order  shall  not  affect  any 
settlement that has  become final and irrevocable prior to such order or immediately thereafter, and the 
right of the system provider to appropriate any collaterals contributed by the system participants towards 
its settlement or other obligations in accordance with the rules, regulations or bye-laws relating to such 
system provider.] 

4[(5) Where an order referred to in sub-section (4) is made with respect toa central counter party, then, 
notwithstanding such order or anything contained in the Banking Regulation Act, 1949 (10 of 1949) or 
the Companies Act, 1956 (1 of 1956) or the Companies Act, 2013 (18 of 2013)  3[or the Insolvency and 
Bankruptcy  Code,  2016]  or  any  other  law  for  the  time  being  in  force,  the  payment  obligations  and 

1. Ins. by Act 18 of 2015, s.3 (w.e.f. 1-6-2015). 
2. Subs. by s.3, ibid., for sub-section (4) (w.e.f. 1-6-2015). 
3. Ins. by Act 31 of 2016, s. 253 and the Ninth Schedule (w.e.f. 15-11-2016). 
4. Ins.by s. 3,ibid. (w.e.f. 1-6-2015). 

10 

 
                                                      
settlement  instructions  between  the  central  counter  party  and  the  system  participants  including  those 
arising from transactions admitted for settlement at a future date, shall be determined forthwith by such 
central counter party in accordance with the gross or netting procedure, as the case may be, approved by 
the  Reserve  Bank,  while  issuing  authorisation  or  under  any  other  provisions  of  this  Act,  and  such 
determination shall be final and irrevocable. 

(6)  Notwithstanding  anything  contained  in  the  Banking  Regulation  Act,  1949  (10  of  1949)  or  the 
Companies  Act,  1956  (1  of  1956)  or  the  Companies  Act,  2013  (18  of  2013)  1[or  the  Insolvency  and 
Bankruptcy Code, 2016] or any other law for the time being in force, the liquidator or receiver or assignee 
(by  whatever  name  called)  of  the  central  counter  party,  whether  appointed  as  provisional  or  otherwise, 
shall— 

(a) not re-open any determination that has become final and irrevocable; 

(b) after appropriating in accordance with the rules, regulations or bye-laws of the central counter 
party, the collaterals provided by the system participants towards their settlement or other obligations, 
return the collaterals held in excess to the system participants concerned.] 
2[Explanation1].—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. 

3[Explanation  2.—For  the  purposes  of  this  section,  the  expression  ―central  counter  party‖  means  a 
system  provider  who  by  way  of  novation  interposes  between  system  participants  in  the  transactions 
admitted for settlement, thereby becoming the buyer to every seller and the seller to every buyer, for the 
purpose of effecting settlement of their transactions.] 

4[23A.  Protection  of  funds  collected  from  customers.—(1)  The  Reserve  Bank  may,  in  public 
interest or in the interest of the customers of designated payment systems or to prevent the affairs of such 
designated payment system from being conducted in a manner prejudicial to the interests of its customers, 
require system provider of such payment system to— 

(a) deposit and keep deposited in a separate account or accounts held in a scheduled commercial 

bank; or 

(b) maintain liquid assets in such manner and form as it may specify from time to time, 

of  an  amount  equal  to  such  percentage  of  the  amounts  collected  by  the  system  provider  of  designated 
payment system from its customers and remaining outstanding, as maybe specified by the Reserve Bank 
from time to time: 

Provided  that  the  Reserve  Bank  may  specify  different  percentages  and  the  manner  and  forms  for 

different categories of designated payment systems. 

(2) The balance held in the account or accounts, referred to in sub-section (1), shall not be utilised for 
any  purpose  other  than  for  discharging  the  liabilities  arising  on  account  of  the  usage  of  the  payment 
service by the customers or for repaying to the customers or for such other purpose as may be specified 
by the Reserve Bank from time to time. 

(3)  Notwithstanding  anything  contained  in  the  Banking  Regulation  Act,  1949  (10  of  1949),  or  the 
Companies  Act,  1956  (1  of  1956)  or  the  Companies  Act,  2013  (18  of  2013)  1[or  the  Insolvency  and 
Bankruptcy  Code,  2016]  or  any  other  law  for  the  time  being  in  force,  the  persons  entitled  to  receive 
payment under sub-section (2) shall have a first and paramount charge on the balance held in that account 
and  the  liquidator  or  receiver  or  assignee  (by  whatever  name  called)  of  the  system  provider  of  the 
designated  payment  system  or  the  scheduled  commercial  bank  concerned,  whether  appointed  as 

1. Ins. by Act 31 of 2016, s. 253 and the Ninth Schedule (w.e.f. 15-11-2016). 
2. Existing Explanation numbered as Explanation 1by s. 3, ibid. (w.e.f. 1-6-2015). 
3. The Explanation 2 ins. by s. 3, ibid. (w.e.f. 1-6-2015). 
4. Ins. by Act 18 of 2015, s. 4 (w.e.f. 1-6-2015). 

11 

 
                                                      
provisional or otherwise, shall not utilise the said balances for any other purposes until all such persons 
are paid in full or adequate provision is made therefor. 

Explanation.—For the purposes of this section, the expressions— 

(a) ―designated payment system‖ shall mean a payment system or a class of payment system, as 
may be specified by the Reserve Bank from time to time, engaged in collection of funds from their 
customers for rendering payment service; 

(b) ―scheduled commercial bank‖ shall mean a ―banking company‖,― corresponding new bank‖, 
―State Bank of India‖ and ―subsidiary bank‖ as defined in section 5 of the Banking Regulation Act, 
1949 (10 of 1949) and included in the Second Schedule to the Reserve Bank of India Act,1934 (2 of 
1934).] 

CHAPTER VI 

SETTLEMENT OF DISPUTES 

24. Settlement of disputes.—(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 authorised 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. 

25. Dishonour of electronic funds transfer for insufficiency, etc., of funds in the account.—(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  extend  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 

12 

 
(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. 

(5) The provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 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. 

CHAPTER VII 

OFFENCES AND PENALTIES 

26. Penalties.—(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 from 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 

13 

 
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. 

27.  Offences  by  companies.—(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. 

28. Cognizance of offences.—(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. 

(2)  Notwithstanding  anything  contained  in  the  Code  of  Criminal  Procedure,  1973  (2  of  1974),  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. 

29. Application of fine.—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. 

30. Power of Reserve Bank to impose fines.—(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 

14 

 
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. 

31. Power to compound offences.—(1) Notwithstanding anything contained in the Code of Criminal 
Procedure, 1973 (2 of 1974), 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. 

CHAPTER VIII 

MISCELLANEOUS 

32.  Act  to  have  overriding  effect.—The  provisions  of  this  Act  shall  have  effect  notwithstanding 

anything inconsistent therewith contained in any other law for the time being in force. 

33. Mode of recovery of penalty.—(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 is 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 sub-section 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. 

15 

 
 
(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  from  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. 

34. Act not to apply to stock exchanges or clearing corporations of stock exchanges.—Nothing 

contained in this Act shall apply to stock exchanges or the clearing corporations of the stock exchanges. 

1[34A.  Act  to  apply  to  designated  trade  repository  and  issuer.—(1)  The  provisions  of  this  Act 
shall apply to, or in relation to, a designated trade repository or issuer, as they apply to, or in relation to, 
payment systems to the extent applicable, subject to the modification that, throughout this Act, unless the 
context otherwise requires,— 

(a) references to a ―payment system‖ or ―system provider‖ shall be construed as references to a 

―designated trade repository‖ or ―issuer‖, as the case may be; 

(b) references to ―commencement of this Act‖ shall be construed with reference to–– 

(i)  a  designated  trade  repository,  as  references  to  the  date  on  which  a  trade  repository  is 

specified by the Reserve Bank as a designated trade repository; and 

(ii)  an  issuer,  as  references  to  commencement  of  the  Payment  and  Settlement  Systems 

(Amendment) Act, 2015 (18 of 2015). 

(2) The Reserve Bank may, on an application by a designated trade repository or otherwise, permit or 
direct the designated trade repository to provide such other services as are deemed necessary from time to 
time. 

Explanation.—For  the  purposes  of  this  section,  the  expression  ―designated  trade  repository‖  shall 
mean a trade repository or a class of trade repositories, as maybe specified by the Reserve Bank from time 
to time.] 

2[34B.  Powers  of  Reserve  Bank  not  to  apply  to  International  Financial  Services  Centre.—
Notwithstanding anything contained in any other law for the time being in force, the powers exercisable 
by the Reserve Bank under this Act,— 

(a) shall not extend to an International Financial Services Centre set up under sub-section (1) of 

section 18 of the Special Economic Zones Act, 2005 (28 of 2005); 

(b)  shall  be  exercisable  by  the  International  Financial  Services  Centres  Authority  established 
under sub-section (1) of section 4 of the International Financial Services Centres Authority Act, 2019,  

in so far as regulation of financial products, financial services and financial institutions that are permitted 
in the International Financial Services Centres are concerned.] 

1. Ins. by Act 18 of 2015, s. 5 (w.e.f. 1-6-2015). 
2. Ins. by Act 50 of 2019, s. 33 and the second Schedule (w.e.f. 1-10-2020). 

16 

 
 
                                                      
35.  Certain  persons  deemed  to  be  public  servants.—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 (45 of 1860). 

36. Protection of action taken in good faith.—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. 

37. Power to remove difficulties.—(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. 

38.  Power  of  Reserve  Bank  to  make  regulations.—(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:— 

(a) the powers and functions of the 1[Board referred to in 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. 

_____________ 

1. Subs. by the Finance Act 2017, s. 153, for ―Committee constituted under sub-section (2)‖  

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