RBI tightens norms for imposing penalty under payment systems law
Payment and Settlement Systems Act (PSS Act) to rationalise and consolidate enforcement action by the central bank.
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As per the revised framework for payment system operators and Banks, operation of a payment system without authorisation, disclosure of information, which is prohibited, and failure to pay the penalty imposed by the Reserve Bank within the stipulated period are among the contraventions under the PSS Act.
"(The) Reserve Bank is empowered to impose a penalty not exceeding Rs 10 lakh or twice the amount involved in such contravention or default where such amount is quantifiable, whichever is more, in case of contraventions/defaults...," said the 'Framework for imposing monetary penalty and compounding of offences under the Payment and Settlement Systems Act, 2007'.
Earlier, the RBI was empowered to impose a penalty not exceeding Rs 5 lakh. The amount was raised following the enactment of the Jan Vishwas (Amendment of Provisions) Act, 2023, which came into force on January 22, 2024.
In cases where such contravention or default is a continuing one, a further penalty of up to Rs 25,000 for every day after the first, during which the contravention or default continues, can also be imposed.
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