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Shreya Shah (Company Secretary)     18 February 2008

Application of authorisation to operate payment system

Dear All,
 
Company Background: We are a payment card industry. We provide payment solutions to the Bank i.e. solutions relating to debit cards and credit cards.
 
Query: As per proviso (a) of Section 4(1) the Payment & Settlements Act, 2007,
 

"(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 ;"

 

My query is that whether our company will have to obtain authorisation from the RBI and if yes, what is the procedure and the last date for application regarding the same.

 

Thanks & Regards

Shreya Shah

 


Learning

 2 Replies

P.V.Poornima (Lawyer)     22 February 2008

The RBI, apart from the role of regulator and supervisor of payment systems, plays the role of a Settlement Bank apart from being a catalyst, an operator and a user. The RBI has been taking initiatives in introducing new modes of more efficient and safe means of effecting payments in the country on a continuous basis. The RBI introduced the system of Magnetic Ink Character Recognition (MICR) based cheque clearing during late 80's for four metropolitan cities (Mumbai, New Delhi, Chennai and Kolkata). During mid 90s, electronic payment systems like ECS and EFT were introduced. During 2004-05, RTGS was introduced. Besides introducing these newer mechanisms or systems, the RBI has also been constantly ensuring that the existing systems are upgraded / refined to increase their efficiency and to meet the requirements of customers. Taking advantage of advancements in technology, the RBI has brought in additional safety measures in these systems to make them secure and also to maintain the integrity of such transactions. Besides operating the various components of payments systems, RBI also participates in these systems as a user. RBI acts as a service provider and after the system stabilises, the responsibility is handed over to other banks / institutions for further development. RBI also has the role of regulating and supervising the various payment systems. The Board for regulation and supervision of Payment and Settlement Systems (BPSS) is a sub-committee of the Central Board of the RBI and is the highest policy making body on payment system. The Board is assisted by a technical committee called National Payments Council (NPC) with eminent experts in the field as members. The Board as well as the council are assisted by a newly created department the Department of Payment and settlement Systems (DPSS). The Board has been entrusted with the responsibility to authorise, prescribe policies and set standards for all existing and future payment systems in the country. The Board also has the powers to determine membership criteria to these systems and related policies.

Shreya Shah (Company Secretary)     27 February 2008

Dear Poornima, Thanks for the reply. But my query is that under the Payment and settlement Systems Act, 2007, is our company liable to get authorisation. Pls reply. Thanks and regards Shreya

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