Ans. A sum of ₹10,000/- (excluding applicable GST) is required to be submitted as application fee, which can be submitted by cash or cheque or payment order or demand draft or electronic fund transfer in favour of the Reserve Bank along with the application for authorisation. The fees can also be submitted in electronic mode. For further details you may send an email.

The form and manner of application for authorisation is available at /documents/87730/30842423/PSSR23022022d57d6e9afaf44d97b9ed577d9d1c7c2b.pdf

Ans. Yes. The PSS Act 2007 does not prohibit foreign entities from operating a payment system in India and the Act does not discriminate/differentiate between foreign entities and domestic entities. (Pl see Sections 4 and 18 of the PSS Act, 2007)

Ans. Yes. All entities, irrespective of domestic or foreign, need to obtain license/ approval / authorization from Reserve Bank before commencing payment system operations in the country. The PSS Act indicates that “No person can operate a payment system except under and in accordance with an authorisation issued by the Reserve Bank”. Criteria are also specified for particular payment systems which form part of the respective payment system guidelines / instructions

The form and manner of application for authorisation is available at /documents/87730/30842423/PSSR23022022d57d6e9afaf44d97b9ed577d9d1c7c2b.pdf

Ans. Financial Market Infrastructure (FMI) is defined as a multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling, or recording payments, securities, derivatives, or other financial transactions. (Please see “Oversight Framework for Financial Market Infrastructures and Retail Payment Systems”, available under the link: /en/web/rbi/-/oversight-framework-for-financial-market-infrastructures-fmis-and-retail-payment-systems-rpss-3864). The term FMI generally refers to systemically important payment systems, Central Securities Depositories (CSDs), Securities Settlement Systems (SSSs), Central Counter Parties (CCPs), and Trade Repositories (TRs) that facilitate the clearing, settlement, and recording of financial transactions. CSDs, SSSs, CCPs are designated as “payment systems” under the PSS Act. TR has been defined and covered under the PSS Act.

The FMIs are subjected, on an on-going basis, to the rules and regulations that are consistent with the Principles for Financial Market Infrastructures (PFMIs) issued by the Committee on Payment and Settlement Systems (CPSS is rechristened as Committee on Payment and Market Infrastructures- CPMI) and International Organisation of Securities Commissions (IOSCO). The Reserve Bank, on June 13, 2020, issued a press release on “Reserve Bank of India publishes the Oversight Framework for Financial Market Infrastructures and Retail Payment Systems”, available under the link: /en/web/rbi/-/press-releases/reserve-bank-of-india-publishes-the-oversight-framework-for-financial-market-infrastructures-and-retail-payment-systems-49947

Ans. Yes. The PSS Act 2007 does not prohibit foreign entities from operating a payment system in India. The Act does not discriminate/differentiate between foreign entities and domestic entities. (Pl see Sections 4 and 18 of the PSS Act, 2007). Please also see Ans to Q.12.

Ans. The PSS Act does not place any restriction on the types of payment systems / services a foreign entity can provide. However, any service provided by a domestic or foreign entity must be in accordance with the overall legal framework of the country.

Foreign entities viz., card networks like MasterCard (Singapore), Visa Worldwide Pte. Limited (Singapore), etc. are authorised under the PSS Act and operating card schemes in India. Also, cross-border remittance service providers viz., Western Union Financial Services Incorporated, USA, MoneyGram Payment Systems Inc, USA., etc. have also been authorised and are providing remittance services. The list of entities authorised under the PSS Act is available at /en/web/rbi/-/publications/certificates-of-authorisation-issued-by-the-reserve-bank-of-india-under-the-payment-and-settlement-systems-act-2007-for-setting-up-and-operating-payment-system-in-india-12043

Ans. The Reserve Bank will consider factors like the need for the proposed payment system, the technical standards and design of proposed system, the security procedures and terms and conditions of operation of the proposed system, the procedure for netting of payment instructions, risk management processes, financial status of the applicant, experience of management and integrity of applicant, consumer interests, monetary and credit policies and other relevant factors while deciding on an application for authorization for commencing or operating a payment system (Section 7 of PSS Act, 2007).

The Reserve Bank will endeavour to dispose of all applications received for authorization within six months from the date of their receipt.

Ans. Application for authorisation of a payment system operator is assessed against the criteria specified for a particular payment system. For example, the application for issuance and operation of PPI is assessed against the Policy Guidelines on Issuance and Operation of Pre-paid Payment Instruments in India. Similarly, in case of CCP, the application would be assessed against the backdrop of PFMI policy document issued by RBI. As per section 6 of the PSS Act, the Reserve Bank may make such inquiries as it may consider necessary for the purpose of satisfying itself the capacity, credentials of the participants or for any other valid reason. In case, the entity is already regulated by any other authority, information from such authorities may be called for making the assessment. It may be mentioned that for licensing Indian entities as banks in the recent past, the process entailed calling for due diligence reports from foreign regulators wherever the applicant entity had group entities operating in foreign jurisdictions.

Ans. Yes, the Reserve Bank can refuse to grant authorization under the PSS Act, 2007. However, the Reserve Bank has to give a written notice to such an applicant giving the reasons for refusal and also a reasonable opportunity of being heard {Section 7 (3) of the PSS Act 2007}.

Ans. Yes, the Reserve Bank is empowered to revoke the authorization granted by it, if the system provider contravenes any provisions of the Act or Regulations, fails to comply with its orders/ directions or violates the terms and conditions under which the authorization was granted to it (Section 8 of PSS Act 2007).