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RBI/2016-17/97
DPSS.CO.OD. No.1082/06.08.005/2016-17
October
20, 2016
To,
Authorised Payment system
operators / banks
Dear Sir/Madam,
Framework for imposing monetary
penalty on Authorised Payment Systems Operators / banks under Payment and
Settlement Systems Act, 2007
The Payment and Settlement
Systems Act, 2007 (PSS Act) has designated the Reserve Bank of India
(Reserve Bank) as the authority for regulation and supervision of payment
systems. Under the said Act, certain powers have been conferred upon the
Reserve Bank.
2. Section 30 of the PSS Act
deals with ‘Power of Reserve Bank to impose fines’. In terms of this
section, certain powers have been conferred upon the Reserve Bank to impose
penalties/fines for certain contraventions/offences more particularly
described in section 26 (2) and 26 (6) of the PSS Act.
3. Section 31 of the PSS Act
deals with ‘Power to compound offences’. Subject to the provisions of this
section, power has been conferred upon the Reserve Bank to compound
contraventions/offences committed by the entity.
4. Now, it has been decided to
put in place a framework for imposition of penalty/fine under section 30 of
the PSS Act and compounding of contraventions/offences under section 31 of
the PSS Act. The details of the framework are as under:
(i) Nature of offences:
This framework for imposition of
penalty/fine/compounding, inter alia, includes the following types of
contraventions/offences that would be considered for levy of
penalty/fine/compounding, as the case may be, in payment systems;
·
Contravention
of provisions of the Act.
·
Non-compliance
of directions or order made there under.
·
Violations
of terms and conditions of authorisation.
(ii) Compounding: ‘Compounding’ is a voluntary process. The
contravener may apply for the compounding of an offence by way of
submitting an application as per the Annex I.
The application for compounding of contravention/violation may be submitted
to the Chief General Manager, Department of Payment and Settlement Systems,
14th floor, Central Office Building, SBS Road, Fort, Mumbai 400001. The
application would be considered provided it is complete in all respects and
the applicant admits to the contravention.
(iii) Operational procedure to
be followed: The Reserve Bank will
follow the following procedure before imposing the penalty/fine or
compounding of the offence on the payment system operators / banks
(entity/ies);
a.
Issue
of letter to the entity calling for explanation citing the offence.
b.
Based
on the explanation and information/evidence submitted by the entity, the
Reserve Bank will examine whether the contravention/offences can be
considered for compounding or levy of penalty/fine.
c.
Issue
of show cause notice for imposing penalty/fine/compounding, in case Reserve
Bank is not satisfied by the explanation.
d.
Personal
hearing to the entity to be given, if requested in writing, before taking
any penal action.
e.
Imposition
of penalty/fine or compounding of contravention/offences.
(iv) Amount of Penalty/fine: The amount of penalty/fine for the various payment
system operators / banks would be based on the nature of
contravention/offences with a minimum penalty of ? 5 lakh. Where the
contravention/violation is not quantifiable, a penalty of minimum ? 5 lakh
with a maximum of ? 1 crore would be levied.
(v) Disclosure: The entities, on whom penalty/fine has been
levied, shall disclose the penalties/fines in their Annual Financial
Statements for the year in which the penalty is levied. Reserve Bank shall
also make the penalty levied public by disclosing the same on its website.
(vi) Method of payment of
penalty/fine: In respect of the entities
maintaining current accounts with the Reserve Bank, the Reserve Bank will
directly debit their current account (after obtaining a mandate to that
effect). The entities which are not maintaining current account with
Reserve Bank, would deposit the amount in the designated account of the RBI
within one week of the issue of written order.
(vii) Non-payment of
penalty/fine: In the event of
non-payment of penalty /fine, the provisions of Section 8 of the PSS Act
would be applicable and necessary action under PSS Act would be initiated
accordingly.
5. These directions are issued
by the Reserve Bank, in exercise of the powers conferred by section 18 of
the Payment and Settlement Systems Act, 2007 (Act 51/2007)
Yours faithfully
(Nilima Ramteke)
General Manager
Encl-Annex I
Annex
I
On
Company Letter head
Format
of Application for Compounding of Contravention under Payment and
Settlement Systems Act
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1
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Name of the applicant (in
BLOCK LETTERS)
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:
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2
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Full address of the applicant
(including Phone/ Fax Number and email id)
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:
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3
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Brief facts of the case
clearly indicating the nature of the contravention, period and amount
involved in the contravention
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4
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Any other information relevant
to the case
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:
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I / We declare that the
particulars given above are true and correct to the best of my / our
knowledge and belief and that I / We am / are willing to accept any
direction / order of the Compounding Authority in connection with
compounding of my / our case.
(Signature of the Applicant)
Name :
Designation:
Dated :
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