The Reserve Bank of India (RBI) has introduced a comprehensive for imposing monetary penalties and compounding offences under the Payment and Settlement Systems Act, 2007, aiming to bolster regulatory compliance within the digital payments landscape.
The framework outlines a range of offences including unauthorised operation of payment systems, providing false information, failure to produce required documents, and non-compliance with RBI directives. These violations can now attract penalties of up to INR1 million (USD11,490), or twice the amount involved (whichever is higher), with potential daily fines for continuing offences.
To ensure consistent enforcement, the RBI has established designated authorities comprising committees of executive directors and regional directors for imposing penalties and compounding offences. Material contraventions determined by factors like severity, frequency and financial impact, will be prioritised for action.
The quantum of penalties will be determined based on principles of proportionality, intent, and mitigating factors, with provisions for adjustment in cases of disproportionate impact.
The RBI has simplified its penalty settlement process, allowing entities to pay a reduced amount, typically 25% less, to resolve certain offences. However, repeated offences will attract higher compounding fees.
The RBI enforces transparency by requiring disclosure of penalties and recording actions in financial statements and through press releases. This framework strengthens regulatory compliance within the digital payment system, ensuring a secure ecosystem, while non-compliance leads to further legal action, reinforcing the RBI’s commitment to enforcement.
