Section 8 of PSSA : Section 8: Revocation Of Authorisation

Explanation using Example

Imagine that PayFast, a company providing digital wallet services, has been operating under an authorization from the Reserve Bank of India (RBI). Recently, it was discovered that PayFast has been processing transactions without implementing mandatory security checks, which is a violation of the Payment and Settlement Systems Act, 2007.

In response to this, the RBI issues a notice to PayFast, informing them of the potential revocation of their authorization and providing them with an opportunity to present their case. Despite the notice, PayFast fails to make the necessary changes to comply with the Act.

Consequently, the RBI, after giving PayFast a chance to be heard and ensuring that the payment system's operation is suspended in the interim, revokes PayFast's authorization to operate. The RBI also includes in the revocation order provisions to protect the customers who might be affected by this action, such as ensuring that all pending transactions are duly completed or refunded.

Furthermore, if PayFast were to become insolvent, they would be required to inform the RBI, which would then take necessary actions to revoke the authorization and protect the interests of those involved with PayFast's payment system.