RBI amends Payment and Settlement Systems Regs.; Now, System Participants also required to comply with payment instructions and other matters.; removes submitting various returns/documents to Bank

By way of the Payment and Settlement Systems (Amendment) Regulations, 2022, Now, system participants* which include service providers will also be required to comply with the regulations, guidelines and instructions, set out in the Schedule, as modified from time to time w.r.t. the format of payment instructions and other matters such as:

• format of payment instructions and the size and standards shape of such instructions;
• the timings to be maintained by payment systems;
• the manner of transfer of funds within the payment system, either through paper, electronic means or in any other manner, between banks or between banks and other system participants;
• such other standards to be complied with the payment systems generally;
• the criteria for membership of payment systems including continuation, termination and rejection of membership;
• the conditions subject to which the system participants shall participate in such fund transfers and the rights and obligations of the system participants in such funds.

Prior to this Amendment, this requirement was only limited to the system providers.

Further, this amendment removes the requirement on the part of system providers to submit various returns/documents to the Bank as required under Regulation 6 (2)**

Also, the instructions set out in the Schedule w.r.t. procedural Guidelines on Electronic Clearing Service (Credit & Debit Clearing) and Operational Manual on NEFT System are omitted.

Please note that though this is dated 10th February 2022, it was published on the RBI website only on 23rd February, 2022.

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*system participant” means a bank or any other person participating in a payment system and includes the system provider [Section 2(p) of the Payment and Settlement Systems Act, 2007]

 **Without prejudice to the generality of the above, every system provider shall submit the following returns/documents to the Bank, namely:-

(a) Monthly return, either in electronic form or paper format or both, containing the number of participants in the payment system operated, payment instructions processed, both in terms of volume and value, and number of instructions returned, with reasons;

(b) Details of the defaults in fulfilling the payment obligations by the system participants to be reported on the date of occurrence;

(c) Monthly return containing the details of the defaults in fulfilling the payment obligations by the system participants;

(d) Quarterly certificate from the bankers about functioning of system provider’s account with them;.

(e) Quarterly statement regarding any disputes between participants or between participants and the system provider;

(f) Annual return relating to the staff strength, income and expenditure;

(g) Annual return from the system provider showing changes in its Board of Directors or partners, as the case may be, changes in shareholding pattern whereby the aggregate shareholding of an individual or a group becomes equivalent to 5 % or more of the paid up capital of the system provider and changes in Memorandum or Articles of Association of the system provider.

Source: Reserve Bank of India