Section 3 in The Payment and Settlement Systems Act, 2007
Title: Designated authority
1[3. Designated authority.--(1) The Reserve Bank shall be the designated authority for the regulation and supervision of payment systems under this Act.
(2) The Reserve Bank shall exercise the powers, perform the functions and discharge the duties conferred on it under this Act through a Board to be known as the "Payments Regulatory Board".
(3) The Board shall consist of the following members, namely:--
(a) the Governor of the Reserve Bank-Chairperson, ex officio;
(b) the Deputy Governor of the Reserve Bank in-charge of the Payment and Settlement Systems-Member, ex officio;
(c) one officer of the Reserve Bank to be nominated by the Central Board of the Reserve Bank-Member, ex officio; and
(d) three persons to be nominated by the Central Government-Members.
(4) The powers and functions of the Board referred to in sub-section (2), the time and venue of its meetings, the procedures to be followed in such meetings (including the quorum at such meetings) and other matters incidental thereto shall be such as may be prescribed.]
1. Subs. by Finance Act 2017, s. 152, for the following :--
DESIGNATED AUTHORITY AND ITS COMMITTEE
3. Designated authority and its Committee.--(1) The Reserve Bank shall be the designated authority for the regulation and supervision of payment systems under this Act.
(2) The Reserve Bank may, for the purposes of exercising the powers and performing the functions and discharging the duties conferred on it by or under this Act, by regulation, constitute a committee of its Central Board to be known as the Board for Regulation and Supervision of Payment and Settlement Systems.
(3) The Board constituted under sub-section (2) shall consist of the following members, namely:--
(a) Governor, Reserve Bank, who shall be the Chairperson of the Board;
(b) Deputy Governors, Reserve Bank, out of whom the Deputy Governor who is in-charge of the Payment and Settlement Systems, shall be the Vice-Chairperson of the Board;
(c) Not exceeding three Directors from the Central Board of the Reserve Bank of India to be nominated by the Governor, Reserve Bank.
(4) The powers and functions of the Board constituted under sub-section (2), the time and venue of its meetings, the procedure to be followed in such meetings, (including the quorum at such meetings) and other matters incidental thereto shall be such as may be prescribed.
(5) The Board for Regulation and Supervision of Payment and Settlement Systems constituted under clause (i) of subsection (2) of section 58 of the Reserve Bank of India Act, 1934 (2 of 1934) shall be deemed to be the Board constituted under this section and continue accordingly until the Board is reconstituted in accordance with the provisions of this Act and shall be governed by the rules and regulations made under the Reserve Bank of India Act, 1934 in so far as they are not inconsistent with the provisions of this Act."
Title: Payment system not to operate without authorization
(1) No person, other than the Reserve Bank, shall commence or operate a payment system except under and in accordance with an authorisation issued by the Reserve Bank under the provisions of this Act:
Provided that nothing contained in this section shall apply to—
(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;
(b) any person acting as the duly appointed agent of another person to whom the payment is due;
(c) a company accepting payments either from its holding company or any of its subsidiary companies or from any other company which is also a subsidiary of the same holding company;
(d) any other person whom the Reserve Bank may, after considering the interests of monetary policy or efficient operation of payment systems, the size of any payment system or for any other reason, by notification, exempt from the provisions of this section.
(2) The Reserve Bank may, under sub-section (1) of this section, authorise a company or corporation to operate or regulate the existing clearing houses or new clearing houses of banks in order to have a common retail clearing house system for the banks throughout the country:
Provided, however, that not less than fifty-one per cent. of the equity of such company or corporation shall be held by public sector banks.
"Explanation".--For the purposes of this clause, "public sector banks" shall include a "corresponding new bank", "State Bank of India" and "subsidiary bank" as defined in section 5 of the Banking Regulation Act, 1949 (10 of 1949).
Title: Application for authorization
(1) Any person desirous of commencing or carrying on a payment system may apply to the Reserve Bank for an authorisation under this Act.
(2) An application under sub-section (1) shall be made in such form and in such manner and shall be accompanied by such fees as may be prescribed.
Title: Inquiry by the Reserve Bank
After the receipt of an application under section 5, and before an authorisation is issued under this Act, the Reserve Bank may make such inquiries as it may consider necessary for the purpose of satisfying itself about the genuineness of the particulars furnished by the applicant, his capacity to operate the payment system, the credentials of the participants or for any other reason and when such an inquiry is conducted by any person authorised by it in this behalf, it may require a report from such person in respect of the inquiry.
Title: Issue or refusal of authorization
(1) The Reserve Bank may, if satisfied, after any inquiry under section 6 or otherwise, that the application is complete in all respects and that it conforms to the provisions of this Act and the regulations issue an authorisation for operating the payment system under this Act having regard to the following considerations, namely:--
(i) the need for the proposed payment system or the services proposed to be undertaken by it;
(ii) the technical standards or the design of the proposed payment system;
(iii) the terms and conditions of operation of the proposed payment system including any security procedure;
(iv) the manner in which transfer of funds may be effected within the payment system;
(v) the procedure for netting of payment instructions effecting the payment obligations under the payment system;
(vi) the financial status, experience of management and integrity of the applicant;
(vii) interests of consumers, including the terms and conditions governing their relationship with payment system providers;
(viii) monetary and credit policies; and
(ix) such other factors as may be considered relevant by the Reserve Bank.
(2) An authorisation issued under sub-section (1) shall be in such form as may be prescribed and shall—
(a) state the date on which it takes effect;
(b) state the conditions subject to which the authorisation shall be in force;
(c) indicate the payment of fees, if any, to be paid for the authorisation to be in force;
(d) if it considers necessary, require the applicant to furnish such security for the proper conduct of the payment system under the provisions of this Act;
(e) continue to be in force till the authorisation is revoked.
(3) Where the Reserve Bank considers that the application for authorisation should be refused, it shall give the applicant a written notice to that effect stating the reasons for the refusal:
Provided that no such application shall be refused unless the applicant is given a reasonable opportunity of being heard.
(4) Every application for authorisation shall be processed by the Reserve Bank as soon as possible and an endeavour shall be made to dispose of such application within six months from the date of filing of such application.