(i) Nature of offences:
This framework for imposition of penalty/fine/compounding, inter alia, includes the following types of contraventions/offences that would be considered for levy of penalty/fine/compounding, as the case may be, in payment systems;
- Contravention of provisions of the Act.
- Non-compliance of directions or order made there under.
- Violations of terms and conditions of authorisation.
‘Compounding’ is a voluntary process. The contravener may apply for the compounding of an offence by way of submitting an application as per the Annex I. The application for compounding of contravention/violation may be submitted to the Chief General Manager, Department of Payment and Settlement Systems, 14th floor, Central Office Building, SBS Road, Fort, Mumbai 400001. The application would be considered provided it is complete in all respects and the applicant admits to the contravention.
(iii) Operational procedure to be followed:
The Reserve Bank will follow the following procedure before imposing the penalty/fine or compounding of the offence on the payment system operators / banks (entity/ies);(a) Issue of letter to the entity calling for explanation citing the offence.(iv) Amount of Penalty/fine:
(b) Based on the explanation and information/evidence submitted by the entity, the Reserve Bank will examine whether the contravention/offences can be considered for compounding or levy of penalty/fine.
(c) Issue of show cause notice for imposing penalty/fine/compounding, in case Reserve Bank is not satisfied by the explanation.
(d) Personal hearing to the entity to be given, if requested in writing, before taking any penal action.
(e) Imposition of penalty/fine or compounding of contravention/offences.
The amount of penalty/fine for the various payment system operators / banks would be based on the nature of contravention/offences with a minimum penalty of Rs. 5 lakh. Where the contravention/violation is not quantifiable, a penalty of minimum Rs. 5 lakh with a maximum of Rs. 1 crore would be levied.
The entities, on whom penalty/fine has been levied, shall disclose the penalties/fines in their Annual Financial Statements for the year in which the penalty is levied. Reserve Bank shall also make the penalty levied public by disclosing the same on its website.
(vi) Method of payment of penalty/fine:
In respect of the entities maintaining current accounts with the Reserve Bank, the Reserve Bank will directly debit their current account (after obtaining a mandate to that effect). The entities which are not maintaining current account with Reserve Bank, would deposit the amount in the designated account of the RBI within one week of the issue of written order.
(vii) Non-payment of penalty/fine:
In the event of non-payment of penalty /fine, the provisions of Section 8 of the PSS Act would be applicable and necessary action under PSS Act would be initiated accordingly.