| 1 |
What is a "Payment System" under the Payment and Settlement Systems (PSS) Act, 2007? |
Section 2(1) (i) of the PSS Act 2007 defines a payment system to mean a system that enables payment to be effected between a payer and a beneficiary, involving clearing, payment or settlement service or all of them, but does not include a stock exchange (Section 34 of the PSS Act 2007 states that its provisions will not apply to stock exchanges or clearing corporations set up under stock exchanges). It is further stated by way of an explanation that a “payment system” includes the systems enabling credit card operations, debit card operations, smart card operations, money transfer operations or similar operations.
All entities operating an authorised payment system will be known as system providers. |
| 2 |
Can entities operate a payment system without RBI authorisation under the PSS Act, 2007? |
No. Under PSS Act, 2007, only the Reserve Bank of India (RBI) and the entities authorised by the Reserve Bank of India can operate a payment system. |
| 3 |
How to apply for RBI authorisation to operate a payment system? |
The application for authorisation has to be made as per Form A under Regulation 3(2) of the Payment and Settlement Systems Regulations, 2008. The application is required to be duly filled up and submitted with the stipulated documents to the Reserve Bank via the RBI’s PRAVAAH portal Link: https://pravaah.rbi.org.in/pravaah |
| 4 |
What is Form A? |
Form A is the application that an applicant needs to fill and submit for authorisation to operate a payment system under Regulation 3(2) of the Payment and Settlement Systems Regulations, 2008. It needs to be submitted via the PRAVAAH portal Link: https://pravaah.rbi.org.in/pravaah |
| 5 |
What needs to be checked before submitting an application to RBI for payment system authorisation? |
a. Complete Form A, prepare supporting documentation along with the additional required documents, and submit the documentation through the PRAVAAH portal.
b. Ensure the form is signed by the company’s authorised representative.
c. Attach proof of payment of the ₹10,000 application fee (plus GST) via electronic transfer (Please refer to Sr. No. 6 for account details).
d. Verify the accuracy and completeness of all submitted information. |
| 6 |
Can multiple companies within the same corporate group be granted authorisation for operating the same payment system? |
Operating the same payment system by companies within the same corporate group will not be encouraged, owing to the inherent risks in such an arrangement and the applications shall be examined accordingly. |
| 7 |
How to pay the application fee? |
Transfer ₹10,000 (plus 18% GST) electronically to:
Beneficiary Name: Reserve Bank of India, DPSS
Account No.: 41-8614038-37
IFSC: RBIS0MBPA04
Upload the payment receipt (e.g., transaction proof) on the PRAVAAH portal. |
| 8 |
What are the basic eligibility criteria for obtaining authorisation from RBI? |
Criteria varies by payment system (see specific RBI guidelines).
General requirements, inter-alia, include:
a. Company registered under the Companies Act unless specifically allowed.
b. The Memorandum of Association (MoA) of the applicant entity must cover the proposed payment system activity.
c. Entities with Foreign Direct Investment (FDI) / Foreign Portfolio Investment (FPI) / Foreign Institutional Investment (FII) shall meet the capital requirements as applicable under the extant Consolidated FDI policy guidelines.
d. “Fit and Proper” status of the Promoters and Management.
e. Experience |
| 9 |
What if incorrect information is submitted? |
It may be noted that submission of false or incorrect information may attract provisions of section 26 (2) of PSS Act, 2007, which is a punishable offence. The applicant entity should suo moto apprise the Bank in writing if there is any error / change in details submitted to the Bank as part of the application. |
| 10 |
What are the various stages of processing that an application for authorisation undergoes? |
Generally, a satisfactory application undergoes the following sequential stages:
i Preliminary scrutiny to verify prima facie eligibility of the applicant;
ii. Comprehensive evaluation of ownership structure, fit and proper criteria, system design, security framework, risk management protocols, governance structure etc.
iii. Grant of In-Principle Authorisation,
iv. Submission and assessment of the System Audit Report (SAR) by the applicant entity;
v. Final assessment leading to issuance of Certificate of Authorisation (CoA).
Note: Applications may be returned or refused at any stage for non-compliance with regulatory requirements. |
| 11 |
What is In-Principle Authorisation (IPA)? |
In-Principle Authorisation (IPA) is a provisional clearance granted after verifying the applicant’s eligibility, business model, proposed payment system details and other aspects. It is valid for a period of six months and allows the applicant entity to set up systems and infrastructure that are required to operationalise the proposed payment system. Once the systems are set-up, the applicant needs to prepare and submit a System Audit Report as specified by the RBI for examination. However, commencement of operations is permissible only upon grant of the Certificate of Authorisation (CoA).
Note: In case the applicant entity fails to submit SAR within a period of six months from the date of IPA, the IPA shall lapse automatically. An applicant entity can seek one-time extension for a maximum period of six months for submission of SAR by making request in writing, in advance with valid reasons. The RBI reserves the right to decline such a request for extension. |
| 12 |
What is System Audit Report (SAR)? |
The System Audit Report is a comprehensive document that assesses and evaluates the various processes and controls within an IT infrastructure that is required to operationalise the payment system. This audit is to be conducted as per a specified checklist provided by the Bank through a CERT-IN empanelled auditor or a Certified Information Auditor (CISA) registered with Information Systems Audit (DIA) qualification of the Institute of the Chartered Accountants of India (ICAI). The application of the applicant entity would be considered for Certificate of Authorisation (CoA) after SAR is complete in all respects and additional checks, if any. |
| 13 |
What is Certificate of Authorisation (CoA)? |
-
The Certificate of Authorisation (CoA) issued to the applicant entity is in the format prescribed in "Form B", under section 4(1) of the Payment and Settlement Systems Regulations, 2008.
-
CoA allows the applicant to commence or carry on a payment system and specify the date on which the authorisation shall take effect. The Reserve Bank, while granting authorisation, may impose such conditions as it may deem fit, and the authorisation so granted shall be in force subject to satisfaction of such conditions.
Note: In case the applicant entity fails to commence business within a period of six months from the date of grant of CoA, the CoA shall lapse automatically. An applicant entity can seek one-time extension for a maximum period of six months for commencing business by making a request in writing, in advance with valid reasons. The RBI reserves the right to decline such a request for extension. |
| 14 |
Can the Reserve Bank refuse to grant authorisation to commence or operate a payment system? |
Yes. The RBI may refuse the authorisation under Section 7(3) of the PSS Act,2007. The applicant is given a written notice of reason/s for refusal and a reasonable opportunity to be heard before the decision is finalised. |
| 15 |
Is there an appeal mechanism when an application is refused by the RBI? |
Yes. Under Section 9 of the PSS Act, an applicant entity may appeal to the Central Government within 30 days of receiving the RBI’s refusal or revocation order. |
| 16 |
What is the difference between return of application and refusal to grant authorisation? |
Return: Applications of those entities not meeting basic eligibility criteria, shall be returned. Return is communicated using a return memo which contains the reason/s for return.
Refusal: Applications of those entities not in conformity with the provisions of PSS Act, 2007 and the regulations issued by RBI, shall be refused. (Section 7 of PSS Act, 2007). Cooling period of one year shall be applicable on entities whose application is refused. During this period applicant entity is prohibited from submitting a fresh application for not only the payment system but also for any other payment system. The decision to refuse the application is taken after granting the applicant entity an opportunity to present its case. |
| 17 |
Can an applicant entity re-apply after return of the application? |
In respect of an applicant entity whose application is returned by the RBI, the applicant entity may apply again after rectifying the issues pointed out while returning the application by the RBI. |
| 18 |
Can an applicant entity re-apply after refusal to grant authorisation? |
In respect of an applicant entity whose application for authorisation is refused, a Cooling Period of one year from the date of refusal shall be applicable. During the Cooling Period, entities are prohibited from submission of applications for operating any payment system under the PSS Act.
The details are available in: Authorisation of entities for operating a Payment System under the Payment and Settlement Systems Act, 2007 (PSS Act) – Introduction of Cooling Period https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12001&Mode=0 |
| 19 |
Where can I check the status/ stage of the application? |
a. Check status through PRAVAAH portal
b. As and when an applicant is granted in-principle or final authorisation, it is duly informed in writing by the Bank and the information about the authorisation is also displayed on the Bank's website
https://rbi.org.in/Scripts/PublicationsView.aspx?id=12043 |
| 20 |
Are there any specific timelines prescribed for processing of applications under the PSS Act, 2007? |
The Reserve Bank of India has published Citizens’ Charter, wherein, timelines are defined for various services offered by the respective departments. The timelines for the services offered by the Department of Payment and Settlement Systems under the PSS Act, 2007 are available at the following page: https://www.rbi.org.in/Scripts/CitiChart.aspx#DPSS |
These FAQs are issued by the Reserve Bank of India for information and general guidance purposes only. The Bank will not be held responsible for actions taken and/or decisions made based on the same. For clarifications or interpretations, if any, one may be guided by the relevant directions, guidelines, circulars and notifications issued from time to time by the Bank.