Ans. Financial Market Infrastructure (FMI) is defined as a multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling, or recording payments, securities, derivatives, or other financial transactions. (Please see “Oversight Framework for Financial Market Infrastructures and Retail Payment Systems”, available under the link: /en/web/rbi/-/oversight-framework-for-financial-market-infrastructures-fmis-and-retail-payment-systems-rpss-3864). The term FMI generally refers to systemically important payment systems, Central Securities Depositories (CSDs), Securities Settlement Systems (SSSs), Central Counter Parties (CCPs), and Trade Repositories (TRs) that facilitate the clearing, settlement, and recording of financial transactions. CSDs, SSSs, CCPs are designated as “payment systems” under the PSS Act. TR has been defined and covered under the PSS Act.

The FMIs are subjected, on an on-going basis, to the rules and regulations that are consistent with the Principles for Financial Market Infrastructures (PFMIs) issued by the Committee on Payment and Settlement Systems (CPSS is rechristened as Committee on Payment and Market Infrastructures- CPMI) and International Organisation of Securities Commissions (IOSCO). The Reserve Bank, on June 13, 2020, issued a press release on “Reserve Bank of India publishes the Oversight Framework for Financial Market Infrastructures and Retail Payment Systems”, available under the link: /en/web/rbi/-/press-releases/reserve-bank-of-india-publishes-the-oversight-framework-for-financial-market-infrastructures-and-retail-payment-systems-49947

Ans. Yes. The PSS Act 2007 does not prohibit foreign entities from operating a payment system in India. The Act does not discriminate/differentiate between foreign entities and domestic entities. (Pl see Sections 4 and 18 of the PSS Act, 2007). Please also see Ans to Q.12.

Ans. The PSS Act does not place any restriction on the types of payment systems / services a foreign entity can provide. However, any service provided by a domestic or foreign entity must be in accordance with the overall legal framework of the country.

Foreign entities viz., card networks like MasterCard (Singapore), Visa Worldwide Pte. Limited (Singapore), etc. are authorised under the PSS Act and operating card schemes in India. Also, cross-border remittance service providers viz., Western Union Financial Services Incorporated, USA, MoneyGram Payment Systems Inc, USA., etc. have also been authorised and are providing remittance services. The list of entities authorised under the PSS Act is available at /en/web/rbi/-/publications/certificates-of-authorisation-issued-by-the-reserve-bank-of-india-under-the-payment-and-settlement-systems-act-2007-for-setting-up-and-operating-payment-system-in-india-12043

Ans. Application for authorisation of a payment system operator is assessed against the criteria specified for a particular payment system. For example, the application for issuance and operation of PPI is assessed against the Policy Guidelines on Issuance and Operation of Pre-paid Payment Instruments in India. Similarly, in case of CCP, the application would be assessed against the backdrop of PFMI policy document issued by RBI. As per section 6 of the PSS Act, the Reserve Bank may make such inquiries as it may consider necessary for the purpose of satisfying itself the capacity, credentials of the participants or for any other valid reason. In case, the entity is already regulated by any other authority, information from such authorities may be called for making the assessment. It may be mentioned that for licensing Indian entities as banks in the recent past, the process entailed calling for due diligence reports from foreign regulators wherever the applicant entity had group entities operating in foreign jurisdictions.

Ans. Yes, the Reserve Bank can refuse to grant authorization under the PSS Act, 2007. However, the Reserve Bank has to give a written notice to such an applicant giving the reasons for refusal and also a reasonable opportunity of being heard {Section 7 (3) of the PSS Act 2007}.

Ans. Yes, the Reserve Bank is empowered to revoke the authorization granted by it, if the system provider contravenes any provisions of the Act or Regulations, fails to comply with its orders/ directions or violates the terms and conditions under which the authorization was granted to it (Section 8 of PSS Act 2007).

Ans. The aggrieved applicant or aggrieved system provider can appeal to the Central Government within 30 days from the date on which the order of refusal or revocation is conveyed to him (Section 9 of PSS Act, 2007).

Ans. The Reserve Bank is empowered to call for from the system provider returns, documents and other information relating to the operation of the payment system. The system provider and all system participants are required to provide Reserve Bank access to any information relating to the operation of the payment system (Section 12 and 13 of PSS Act, 2007).

Ans. Yes, under Section 15 (2) of the PSS Act, the Reserve Bank may disclose any document or information obtained by it to any person to whom the disclosure of such document or information is considered necessary for protecting the integrity, effectiveness or security of the payment system, or in the interest of banking or monetary policy or the operation of the payment systems generally or in the public interest.

Ans. The Reserve Bank, in order to ensure compliance of the provisions of the PSS Act, 2007 and the Regulations made thereunder, can depute an officer authorized by it to enter any premises where a payment system is being operated, inspect any equipment, including any computer system or document, and call upon any employee of the system provider or participant to provide any document or information as required by it (Section 14 of PSS Act, 2007).