Vidhi Codex

The Payment and Settlement Systems Act, 2007

The Payment and Settlement Systems Act, 2007

Finance200741 sections8 chapters

The Payment and Settlement Systems Act, 2007 regulates and supervises all payment and settlement networks in India, including electronic funds transfers, card operations, and money transfer services. Administered by the Reserve Bank of India, this federal law applies directly to all banks, financial institutions, and technology providers operating or participating in payment systems. The legislation matters because it secures the overall stability of the national financial infrastructure. It makes transactional settlements legally final, protects customer funds during insolvencies, resolves system disputes, and establishes penalties for failed electronic payments, ensuring safety and public trust in the country's own growing digital economy.

Start reading →Read full ActSections

Chapter I PRELIMINARY →

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

Chapter II DESIGNATED AUTHORITY →

  1. 3Designated authority.

Chapter III AUTHORISATION OF PAYMENT SYSTEMS →

  1. 4Payment system not to operate without authorisation.
  2. 5Application for authorisation.
  3. 6Inquiry by the Reserve Bank.
  4. 7Issue or refusal of authorisation.
  5. 8Revocation of authorisation.
  6. 9Appeal to the Central Government.

Chapter IV REGULATION AND SUPERVISION BY THE RESERVE BANK →

  1. 10Power to determine standards.
  2. 10ABank, etc., not to impose charge for using electronic modes of payment.
  3. 11Notice of change in the payment system.
  4. 12Power to call for returns, documents or other information.
  5. 13Access to information.
  6. 14Power to enter and inspect.
  7. 15Information, etc., to be confidential.
  8. 16Power to carry out audit and inspection.
  9. 17Power to issue directions.
  10. 18Power of Reserve Bank to give directions generally.
  11. 19Directions of Reserve Bank to be complied with.

Chapter V RIGHTS AND DUTIES OF A SYSTEM PROVIDER →

  1. 20System provider to act in accordance with the Act, regulations, etc.
  2. 21Duties of a system provider.
  3. 22Duty to keep documents in the payment system confidential.
  4. 23Settlement and netting.
  5. 23AProtection of funds collected from customers.

Chapter VI SETTLEMENT OF DISPUTES →

  1. 24Settlement of disputes.
  2. 25Dishonour of electronic funds transfer for insufficiency, etc., of funds in the account.

Chapter VII OFFENCES AND PENALTIES →

  1. 26Penalties.
  2. 27Offences by companies.
  3. 28Cognizance of offences.
  4. 29Application of fine.
  5. 30Power to exempt.
  6. 31Power to compound offences.

Chapter VIII MISCELLANEOUS →

  1. 32Act to have overriding effect.
  2. 33Mode of recovery of penalty.
  3. 34Act not to apply to stock exchanges or clearing corporations of stock exchanges.
  4. 34AAct to apply to designated trade repository and issuer.
  5. 34BPowers of Reserve Bank not to apply to International Financial Services Centre
  6. 35Certain persons deemed to be public servants.
  7. 36Protection of action taken in good faith.
  8. 37Power to remove difficulties.

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