Authorisation of entities for operating a Payment System under the Payment and Settlement Systems Act, 2007 (PSS Act) – Introduction of Cooling Period

Last updated: 05 December 2020

Save Share

Quick Summary

The Reserve Bank of India (RBI) has introduced a one-year 'cooling period' for entities involved in operating payment systems. This applies to authorised operators whose authorisation is revoked or not renewed, those who voluntarily surrender their authorisation, or applicants whose authorisation has been rejected. New entities formed by promoters involved in these situations will also be subject to this period. During this time, these entities are prohibited from applying to operate any payment system under the Payment and Settlement Systems Act, 2007.

Reserve Bank of India

RBI/2020-21/73
DPSS.CO.OD.No.753/06.08.005/2020-21

December 4, 2020

The Chairman / Managing Director / Chief Executive Officer
Non-bank Payment System Operators

Madam / Dear Sir

Authorisation of entities for operating a Payment System under the Payment and Settlement Systems Act, 2007 (PSS Act) – Introduction of Cooling Period

Please refer to provisions contained in Section 4 of PSS Act and ‘Oversight Framework for Financial Market Infrastructures and Retail Payment Systems issued on June 13, 2020’, in terms of which any person before commencing or operating a payment system shall obtain authorisation from the Reserve Bank and for the purpose shall apply in a prescribed format to RBI as defined in Payment and Settlement Systems Regulations, 2008.

2. To inculcate discipline and encourage submission of applications by serious players as also for effective utilisation of regulatory resources, it has been decided to introduce the concept of Cooling Period in the following situations –

a. Authorised Payment System Operators (PSOs) whose Certificate of Authorisation (CoA) is revoked or not-renewed for any reason; or

b. CoA is voluntarily surrendered for any reason; or

c. Application for authorisation of a payment system has been rejected by RBI.

d. New entities that are set-up by promoters involved in any of the above categories; definition of promoters for the purpose, shall be as defined in the Companies Act, 2013.

3. The Cooling Period shall be for one year from the date of revocation / non-renewal / acceptance of voluntary surrender / rejection of application, as the case may be. In respect of entities whose application for authorisation is returned for any reason by RBI, condition of Cooling Period shall be invoked after giving the entity an additional opportunity to submit the application.

4. During the Cooling Period, entities shall be prohibited from submission of applications for operating any payment system under the PSS Act.

5. This directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

Yours faithfully,

(P Vasudevan)
Chief General Manager

FAQ :

The cooling period is introduced to encourage discipline, ensure applications are submitted by serious players, and for the effective utilisation of regulatory resources.

The cooling period applies to authorised Payment System Operators (PSOs) whose authorisation is revoked or not renewed, those who voluntarily surrender their authorisation, and applicants whose authorisation has been rejected by the RBI. It also applies to new entities set up by promoters involved in these categories.

The cooling period is for one year, starting from the date of revocation, non-renewal, acceptance of voluntary surrender, or rejection of the application.

If an application for authorisation is returned for any reason, the cooling period will be invoked after the entity is given an additional opportunity to resubmit the application.

No, during the cooling period, entities are prohibited from submitting applications for operating any payment system under the Payment and Settlement Systems Act, 2007.

Guest

Notification No : RBI/2020-21/73 DPSS.CO.OD.No.753/06.08.005/2020-21
Published in Community & General
Source : https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12001&Mode=0

Share Report Abuse

Comments