Direct Tax
Consulting
ESG Advisory
Indirect Tax
Growth Advisory
Internal Audit
BFSI Audit
Industry Audit
Valuation
RBI Services
SEBI Services
IRDA Registration
AML Advisory
IBC Services
NBFC Compliance
IRDA Compliance
Finance & Accounts
Payroll Compliance Services
HR Outsourcing
LPO
Fractional CFO
General Legal
Corporate Law
Debt Recovery
Select Your Location
In the past few years the payment landscape has undergone rapid developments with increased adoption of technology, dis-intermediation, availability of payment products, significant surge in turnover, entry of non-bank players etc. With a sea change in payment system landscape, it is encumbent on the part of the government to ensure safe and secure environment and ensure that various stakeholders confirm to the regulatory environment. As a consequence to that, the Reserve Bank of India (RBI) has decided to revise the levy of penalty on payment system operators.
Table of Contents
RBI regulates the activities of Payment Systems and Payment Systems Operators/ Banks by way of directives, guidelines issued under Payments and Settlements Systems Act 2007. The entities regulated by Payment Systems and systems participants include credit and debit card providers, IMPS, UPI, digital wallets, payment gateways, prepaid payment instrument like employee meal vouchers etc.
A framework was issued by RBI in the year of 2016 which imposed monetary penalties on Authorised Payment Systems Operators/ Banks under Payment and Settlement Systems Act, 2007 (referred as the old framework) offering procedural guidance on levy of penalties and compounding under the Payment and Settlement Systems Act. A few years back, RBI has replaced the old framework with a new framework by issuing a circular dated 10th January, 2020.
Sections 26-31 of Chapter VII of the Payment and Settlement Systems Act, 2007 cover the provisions related to the offences and penalties which are punishable fine and/ or imprisonment. Some of the offences committed by the payment systems and payment systems operators under section 26 include acts such as non-compliance of Anti-Money Laundering/ KYC norms, breach of limits in leading prepaid cards, breach of data localisation norms, non- maintenance of minimum net worth etc.
Section of 30 of the Payment and Settlement Systems Act provides for imposition of penalty on payment system operators on making of a false statement or wilfully omitting to make a material statement or contravention of any provision of the act, or defaulting in complying with any regulation, order or direction and also against those provisions where no penalty has been provided.
Given the broadening of the landscape of the fintech industry and more and more players making their way in, compliance with the provisions of the Payment and Settlement Systems Act, 2007 has also increased significantly. By issuing the new framework of penalty on Payment System Operators/ Banks, RBI has itself curtailed a wide range of discretionary powers entrusted on it. This has been seen as a welcome move from the industry as it is expected to increase transparency in the in the regulatory actions in a sector which is heavily regulated.
Read our Article:10 Major Digital Payment Methods available in India
Auditing your BPO audit checklist and BPO supplier does not entail constant micromanagement. To...
Whenever the company is considering expanding its business, an investment or funding is necessa...
Historically benefits of opening an NBFC bank have boosted the financial ecosystem across India...
Tax implications of business restructuring can be viewed as a crucial procedure for ending the...
SEBI has issued notifications SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/14 to recognized stock excha...
Are you human?: 1 + 3 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
In the last few years, we have seen a rapid increase in the use of digital payment methods. This has increased all...
21 Sep, 2020
Whether it is through mobile banking or through digital modes of payment, digital technologies have played a crucia...
06 Jul, 2023
Chat on Whatsapp
Hey I'm Suman. Let's Talk!