New FAQ Page 2 - RBI - Reserve Bank of India
Payment and Settlement Systems Act, 2007
Ans. Yes, Reserve Bank has the authority to conduct on-site inspection, under the PSS Act.
However, foreign entities located in overseas jurisdictions may be exempted from certain requirements applicable to domestic payment systems (India) subject to the RBI concluding cooperative agreements with the home regulator/s.
Ans. The PSS Act 2007 defines “netting” and legally recognizes settlement finality. It states that a settlement, whether gross or net, will be final and irrevocable as soon as the money, securities, foreign exchange or derivatives or other transactions payable as a result of such settlement is determined, whether or not such money, securities or foreign exchange or other transactions is actually paid. In case a system participant is declared insolvent, or is dissolved or is wound up, no other law can affect any settlement which has become final and irrevocable and the right of the system provider to appropriate the collaterals contributed by the system participants towards settlement or other obligations.
This Act also legally recognizes the loss allocation among system participants and payment system, where the rules provide for this mechanism
Page Last Updated on: December 11, 2022