Section 6 in The Payment and Settlement Systems Act, 2007
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.
Title: Revocation of authorization
(1) If a system provider,--
(i) contravenes any provisions of this Act, or
(ii) does not comply with the regulations, or
(iii) fails to comply with the orders or directions issued by the designated authority, or
(iv) operates the payment system contrary to the conditions subject to which the authorisation was issued,
the Reserve Bank may, by order, revoke the authorisation given to such system provider under this Act:
Provided that no order of revocation under sub-section (1) shall be made—
(i) except after giving the system provider a reasonable opportunity of being heard; and
(ii) without prejudice to the direction of the Reserve Bank to the system provider that the operation of the payment system shall not be carried out till the order of revocation is issued.
(2) Nothing contained in sub-section (1) shall apply to a case where the Reserve Bank considers it necessary to revoke the authorisation given to a payment system in the interest of the monetary policy of the country or for any other reasons to be specified by it in the order.
(3) The order of revocation issued under sub-section (1) shall include necessary provisions to protect and safeguard the interests of persons affected by such order of revocation.
(4) Where a system provider becomes insolvent or dissolved or wound up, such system provider shall inform that fact to the Reserve Bank and thereupon the Reserve Bank shall take such steps as deemed necessary to revoke the authorisation issued to such system provider to operate the payment system.
Title: Appeal to the Central Government
(1) Any applicant for an authorisation whose application for the operation of the payment system is refused under sub-section (3) of section 7 or a system provider who is aggrieved by an order of revocation under section 8 may, within thirty days from the date on which the order is communicated to him, appeal to the Central Government.
(2) The Central Government shall endeavour to dispose of an appeal under sub-section (1) within a period of three months.
(3) The decision of the Central Government on the appeal under sub-section (1) shall be final.
Title: Power to determine standards
(1) The Reserve Bank may, from time to time, prescribe—
(a) the format of payment instructions and the size and shape of such instructions;
(b) the timings to be maintained by payment systems;
(c) the manner of transfer of funds within the payment system, either through paper, electronic means or in any other manner, between banks or between banks and other system participants;
(d) such other standards to be complied with the payment systems generally;
(e) the criteria for membership of payment systems including continuation, termination and rejection of membership;
(f) the conditions subject to which the system participants shall participate in such fund transfers and the rights and obligations of the system participants in such funds.
(2) Without prejudice to the provisions of sub-section (1), the Reserve Bank may, from time to time, issue such guidelines, as it may consider necessary for the proper and efficient management of the payment systems generally or with reference to any particular payment system.