Section 7 of The Payment and Settlement Systems Act, 2007
- (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.
Summary
- The Reserve Bank can grant permission to run a payment system after checking the details provided by the applicant.
- The Reserve Bank looks at technical standards, security procedures, and the financial status and experience of the management.
- It also considers the interests of consumers and national monetary or credit policies before making a decision.
- If the Reserve Bank plans to refuse an application, it must give the applicant a written notice and a fair chance to be heard.
- The Reserve Bank tries to finish reviewing and decide on an application within six months of receiving it.
Practical examples
FAQ
1. How long does the Reserve Bank take to approve an application?
The Reserve Bank makes an effort to process and decide on an application within six months.
2. What factors does the Reserve Bank consider before giving permission?
They look at the need for the system, technical and security designs, the integrity of the management, and how it affects consumers.
3. Can the Reserve Bank refuse my application without a reason?
No, they must give you a written notice stating the reasons and provide you with a reasonable opportunity to be heard.
Test yourself
Q1.Under Section 7 of The Payment and Settlement Systems Act, 2007, what is the standard timeframe the Reserve Bank aims for to dispose of an application?
Q2.Under Section 7 of The Payment and Settlement Systems Act, 2007, what must occur before the Reserve Bank can officially refuse an application for authorisation?
Q3.When the Reserve Bank conducts an inquiry under Section 6 of The Payment and Settlement Systems Act, 2007, how does this impact the final decision under Section 7?
Q4.Under Section 7 of The Payment and Settlement Systems Act, 2007, which of these is a specific detail that MUST be included in an issued authorisation?