FYI -
About Payment Settlement Systems Act:
The Payment and Settlement Systems Act was passed in 2007 and says that no person other than the RBI can commence or operate a payment system, except with an authorization issued by the RBI. The Act came into effect from August 2008 and existing payment systems were given six months to get authorization from the RBI.
While other money transfer services have complied with the Act and have already got authorization from the RBI, PayPal choosed to ignore the Act for about 18 months till the RBI finally took action.
Indiaโs monetary regulating authority, Reserve Bank of India, has made an official statement. Alpana Killawala, spokeswoman of the Reserve Bank of India (RBI) said:
"PayPal needs authorization to operate a cross-border money transfer service, under the countryโs Payment and Settlement Systems Act."
Payment Settlement Act - April 2008 (Press Release)
It may be recalled that the Payment and Settlement Systems Bill was passed by Parliament and became an Act known as the Payment and Settlement Systems Act 2007 after receiving the assent of the Honโble President on December 20, 2007. The Act gives powers to the Reserve Bank of India to regulate and supervise the payment and settlement systems in the country, gives it authority to permit the setting up /continuance of such systems, call for information/data and issue directions from/ to payment system providers. The Act also defines a payment system as well as gives legal recognition to multilateral netting and settlement finality. The Reserve Bank is empowered under the Act to make regulations to implement the provisions of the Act.
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