MISCELLANEOUSCentral
Section 33 of The Payment and Settlement Systems Act, 2007
- (1)The penalty imposed on the defaulter by the Reserve Bank under section 30 may be recovered by issuing a notice to any person from whom any amount is due to the defaulter, by requiring such person to deduct from the amount payable by him to the defaulter, the amount payable to the Reserve Bank by way of penalty and pay to the Reserve Bank.
- (2)Save as otherwise provided in this section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where such notice is issued to a post office, bank or an insurer, it shall not be necessary for any passbook, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made notwithstanding that any rule, practice or requirement to the contrary.
- (3)Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.
- (4)Where a person to whom the notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the defaulter or that he does not hold any money for or on account of the defaulter, then, nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Reserve Bank to the extent of his own liability to the defaulter on the date of the notice, or to the extent of the penalty imposed on the defaulter by the Reserve Bank, whichever is less.
- (5)The Reserve Bank may at any time or from time to time, amend or revoke any notice issued under this section or extend the time for making the payment in pursuance of such notice.
- (6)The Reserve Bank shall grant a receipt for any amount paid to it in compliance with a notice issued under this section and the person so paying shall be fully discharged from his liability to the defaulter to the extent of the amount so paid.
- (7)Any person discharging any liability to the defaulter after the receipt of a notice under this section shall be personally liable to the Reserve Bank to the extent of his own liability to the defaulter so discharged or to the extent of the penalty imposed on the defaulter by the Reserve Bank, whichever is less.
- (8)If the person to whom the notice under this section is sent fails to make payment in pursuance thereof to the Reserve Bank, he shall be deemed to be the defaulter in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear due from him in the manner provided in this section. Explanation.--For the purposes of this section, "defaulter" means any person or system provider or system participant on whom the Reserve Bank has imposed a penalty under section 30.
Summary
- If a person does not pay a penalty imposed by the Reserve Bank, the bank can collect it from others.
- The Reserve Bank can send a notice to anyone who owes money to the person who was fined.
- People receiving this notice must pay the money to the Reserve Bank instead of the fined person.
- This applies to banks, insurers, and post offices, and they do not need to see a passbook or policy to make the payment.
- If a person gets this notice and then pays the fined person anyway, they become personally liable to the Reserve Bank.
- If someone claims they do not owe the fined person money but is lying, they can be held personally responsible for the fine.
- The Reserve Bank will provide a receipt, which clears the sender's debt to the fined person.
Practical examples
1A payment provider owes a 10 lakh penalty. The RBI sends a notice to a bank where the provider has a deposit. The bank must send 10 lakh to the RBI, and the provider cannot sue the bank for that money.
2An insurance company owes a refund to a person who was fined by the RBI. The RBI notifies the insurer to pay the refund amount to the RBI instead.
FAQ
1. Can the Reserve Bank take money from my bank account to pay someone else's fine?
Only if you owe money to that person. The RBI can order you to pay them instead of paying the person who owes the fine.
2. What happens if I ignore the notice and pay the fined person?
You will become personally liable to pay that same amount to the Reserve Bank.
3. Do I need a passbook or original documents to pay the RBI under this section?
No, the law says the notice must be followed even if usual rules require a passbook or document.
4. What if I really do not owe any money to the person who was fined?
You can make a statement on oath saying you do not owe them anything. If this is true, you do not have to pay.
Test yourself
Q1.Under Section 33 of The Payment and Settlement Systems Act, 2007, what happens to a claim on property that arises after a recovery notice is issued?
Q2.According to Section 33 of The Payment and Settlement Systems Act, 2007, if a bank pays the Reserve Bank as directed, what is the effect on its debt to the original defaulter?
Q3.Under Section 33 of The Payment and Settlement Systems Act, 2007, who is considered a "defaulter" for the purpose of penalty recovery?
Q4.If a person notified under Section 33 of The Payment and Settlement Systems Act, 2007, fails to pay the Reserve Bank, what is their legal status?