PAYMENT & SETTLEMENTS SYSTEMS ACT, 2007

The Payment and Settlements Systems Act, 2007 is a law passed by the Indian government to provide a legal framework for the regulation and supervision of payment systems in India. The act aims to ensure the safety and efficiency of payment systems and promote the development of electronic payments.

The act provides for the establishment of a regulatory authority, called the Reserve Bank of India (RBI), which is responsible for overseeing the payment systems in the country. The RBI has the power to grant licenses to payment system providers and to set rules and standards for their operations.

Under the act, payment systems are defined broadly to include any system or arrangement for the transfer of funds between two or more parties, including electronic funds transfer, credit card transactions, and mobile payments. The act also covers settlement systems, which are systems used to settle financial transactions between parties.

The act sets out various provisions related to the operation and regulation of payment systems, including requirements for the licensing and registration of payment system providers, rules for the settlement of disputes between parties, and provisions related to the security and confidentiality of payment transactions.

One of the key objectives of the Payment and Settlements Systems Act, 2007 is to promote financial inclusion by making electronic payments more accessible and affordable to all segments of society. The act also aims to encourage innovation in payment systems and to promote competition among payment system providers.

Overall, the Payment and Settlements Systems Act, 2007 provides a comprehensive framework for the regulation and supervision of payment systems in India, which is critical to ensuring the safety, efficiency, and stability of the country’s financial system.

Here are some of the key points of the Payment and Settlement Systems Act, 2007:

1. Regulator and supervisor: The Reserve Bank of India (RBI) is the regulator and supervisor of payment and settlement systems in India.
2. Board for Regulation and Supervision of Payment and Settlement Systems (BPSS): The act provides for the establishment of a BPSS within the RBI, which is responsible for the oversight of payment and settlement systems in the country.
3. Authorization: All payment and settlement systems in India must obtain authorization from the RBI before they can commence operations in the country.
4. Compliance: The operators of payment and settlement systems are required to comply with the regulatory requirements and guidelines issued by the RBI from time to time.
5. Payment and Settlement Systems Ombudsman: The act provides for the establishment of a Payment and Settlement Systems Ombudsman, who is responsible for the redressal of customer grievances related to payment and settlement systems in India.
6. Objectives: The act aims to ensure the safety, efficiency, and integrity of payment and settlement systems, and to promote the development of secure and efficient electronic payment systems.
7. Legal framework: The Payment and Settlement Systems Act, 2007 provides a comprehensive legal framework for the regulation and supervision of payment and settlement systems in India.

Overall, the act is designed to promote the development of a safe, efficient, and secure payment and settlement system in India, and to protect the interests of customers who use these systems.