Section 19 in The Payment and Settlement Systems Act, 2007
Title: Directions of Reserve Bank to be complied with
Every person to whom a direction has been issued by the Reserve Bank under this Act shall comply with such direction without any delay and a report of compliance shall be furnished to the Reserve Bank within the time allowed by it.
Title: System provider to act in accordance with the Act, regulations, etc.
Every system provider shall operate the payment system in accordance with the provisions of this Act, the regulations, the contract governing the relationship among the system participants, the rules and regulations which deal with the operation of the payment system and the conditions subject to which the authorisation is issued, and the directions given by the Reserve Bank from time to time.
Title: Duties of a system provider
(1) Every system provider shall disclose to the existing or potential system participants, the terms and conditions including the charges and the limitations of liability under the payment system, supply them with copies of the rules and regulations governing the operation of the payment system, netting arrangements and other relevant documents.
(2) It shall be the duty of every system provider to maintain the standards determined under this Act.
Title: Duty to keep documents in the payment system confidential
(1) A system provider shall not disclose to any other person the existence or contents of any document or part thereof or other information given to him by a system participant, except where such disclosure is required under the provisions of this Act or the disclosure is made with the express or implied consent of the system participant concerned or where such disclosure is in obedience to the orders passed by a court of competent jurisdiction or a statutory authority in exercise of the powers conferred by a statute.
(2) The provisions of the Bankers' Book Evidence Act, 1891(18 of 1991) shall apply in relation to the information or documents or other books in whatever form maintained by the system provider.
Title: Settlement and netting
(1) The payment obligations and settlement instructions among the system participants shall be determined in accordance with the gross or netting procedure, as the case may be, approved by the Reserve Bank while issuing authorisation to a payment system 1[under section 7, or, such gross or netting procedure as may be approved by it under any other provisions of this Act].
(2) Where the rules providing for the operation of a payment system indicates a procedure for the distribution of losses between the system participants and the payment system, such procedure shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force.
(3) A settlement effected under such procedure shall be final and irrevocable.
2[(4) Where, by an order of a court, Tribunal or authority—
(a) a system participant is declared as insolvent or is dissolved or wound up; or
(b) a liquidator or receiver or assignee (by whatever name called), whether provisional or otherwise, is appointed in a proceeding relating to insolvency or dissolution or winding up of a system participant,
then, notwithstanding anything contained in the Banking Regulation Act,1949 (10 of 1949) or the Companies Act,1956 (1 of 1956) or the Companies Act, 2013 (18 of 2013) 3[or the Insolvency and Bankruptcy Code, 2016] or any other law for the time being in force, such order shall not affect any settlement that has become final and irrevocable prior to such order or immediately thereafter, and the right of the system provider to appropriate any collaterals contributed by the system participants towards its settlement or other obligations in accordance with the rules, regulations or bye-laws relating to such system provider.]
4[(5) Where an order referred to in sub-section (4) is made with respect to a central counter party, then, notwithstanding such order or anything contained in the Banking Regulation Act, 1949 (10 of 1949) or the Companies Act,1956 (1 of 1956) or the Companies Act, 2013 (18 of 2015) 3[or the Insolvency and Bankruptcy Code, 2016] or any other law for the time being in force, the payment obligations and settlement instructions between the central counter party and the system participants including those arising from transactions admitted for settlement at a future date, shall be determined forthwith by such central counter party in accordance with the gross or netting procedure, as the case may be, approved by the Reserve Bank, while issuing authorisation or under any other provisions of this Act, and such determination shall be final and irrevocable.
(6) Notwithstanding anything contained in the Banking Regulation Act, 1949 (10 of 1949) or the Companies Act, 1956 (1 of 1956) or the Companies Act, 2013 (18 of 2013) 3[or the Insolvency and Bankruptcy Code, 2016] or any other law for the time being in force, the liquidator or receiver or assignee (by whatever name called) of the central counter party, whether appointed as provisional or otherwise, shall—
(a) not re-open any determination that has become final and irrevocable;
(b) after appropriating in accordance with the rules, regulations or bye-laws of the central counter party, the collaterals provided by the system participants towards their settlement or other obligations, return the collaterals held in excess to the system participants concerned.]
5[Explanation 1].--For the removal of doubts, it is hereby declared that the settlement, whether gross or net, referred to in this section is 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 derivatives or other transactions is actually paid.
6[Explanation 2].--For the purposes of this section, the expression "central counter party" means a system provider who by way of novation interposes between system participants in the transactions admitted for settlement, thereby becoming the buyer to every seller and the seller to every buyer, for the purpose of effecting settlement of their transactions.]
1. Ins. by Act 18 of 2015, s. 3 (w.e.f. 1-6-2015).
2. Subs. by s. 3, ibid., for sub-section (4) (w.e.f. 1-6-2015).
3. Ins. by Act 31 of 2016, s. 253 and the Ninth Schedule (w.e.f. 15-11-2016).
4. Ins. by s. 3, ibid. (w.e.f. 1-6-2015).
5. Existing Explanation numbered as Explanation 1 by s. 3, ibid. (w.e.f. 1-6-2015).
6.The Explanation 2 ins. by s. 3, ibid. (w.e.f. 1-6-2015).