Section 26 of The Payment and Settlement Systems Act, 2007
- (1)Where a person contravenes the provisions of section 4 or fails to comply with the terms and conditions subject to which the authorisation has been issued under section 7, he shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to ten years or with fine which may extend to one crore rupees or with both and with a further fine which may extend to one lakh rupees for every day, after the first during which the contravention or failure to comply continues.
- (2)Whoever in any application for authorisation or in any return or other document or on any information required to be furnished by or under, or for the purpose of, any provision of this Act, wilfully makes a statement which is false in any material particular, knowing it to be false or wilfully omits to make a material statement, shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine which shall not be less than ten lakh rupees and which may extend to fifty lakh rupees.
- (3)If any person fails to produce any statement, information, returns or other documents, or to furnish any statement, information, returns or other documents, which under section 12 or under section 13, it is his duty to furnish or to answer any question relating to the operation of a payment system which is required by an officer making inspection under section 14, he shall be 1ic956liable to penalty as may be imposed in accordance with the provisions of section 30].
- (4)If any person discloses any information, the disclosure of which is prohibited under section 22, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five lakh rupees or an amount equal to twice the amount of the damages incurred by the act of such disclosure, whichever is higher or with both.
- (5)Where a direction issued under this Act is not complied with within the period stipulated by the Reserve Bank or where no such period is stipulated, within a reasonable time or where the penalty imposed by the Reserve Bank under section 30 is not paid within a period of thirty days from the date of the order, the system provider or the system participant which has failed to comply with the direction or to pay the penalty shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to ten years, or with fine which may extend to one crore rupees or with both and where the failure to comply with the direction continues, with further fine which may extend to one lakh rupees for every day, after the first during which the contravention continues.
- (6)If any provision of this Act is contravened, or if any default is made in complying with any other requirement of this Act, or of any regulation, order or direction made or given or condition imposed thereunder and in respect of which no penalty has been specified, then, the person guilty of such contravention or default, as the case may be, shall be 1[liable to penalty as may be imposed in accordance with the provisions of section 30].
Summary
- Ongoing violations can lead to an extra fine of 1 lakh rupees for every single day.
- Failing to provide requested documents or answer inspectors can result in penalties imposed by the Reserve Bank.
- Disclosing confidential information (breaking Section 22) can lead to 6 months in jail or a fine.
Practical examples
FAQ
1. What is the highest jail term under this section?
For serious offences like operating without a license, the jail term can extend up to ten years.
2. Is there a minimum jail term?
Yes, for operating without a license or breaking license conditions, the imprisonment shall not be less than one month.
3. What happens if I keep breaking the law every day?
You can be charged a further fine of up to one lakh rupees for every day the failure continues.
4. What if I reveal secret customer data?
You could face up to six months in jail or a fine of five lakh rupees or twice the damages caused, whichever is higher.
Test yourself
Q1.Under Section 26 of The Payment and Settlement Systems Act, 2007, what is the penalty for wilfully making a false statement in a return required under Section 12?
Q2.Under Section 26 of The Payment and Settlement Systems Act, 2007, what is the maximum prison sentence for operating a payment system without authorisation as required by Section 4?
Q3.If a person fails to produce a document requested by the Reserve Bank under Section 12 or 13, what happens under Section 26 of The Payment and Settlement Systems Act, 2007?
Q4.Under Section 26 of The Payment and Settlement Systems Act, 2007, what is the penalty for a person who discloses information in violation of Section 22?