Section 30 of PSSA : Section 30: Power Of Reserve Bank To Impose Fines

Explanation using Example

Imagine a scenario where a payment system operator fails to comply with the directives issued by the Reserve Bank of India (RBI) regarding the maintenance of escrow accounts. This non-compliance is a contravention under Section 26 of the Payment and Settlement Systems Act, 2007.

Upon discovering the contravention, the RBI decides to take action against the operator. As per Section 30(1), the RBI has the authority to impose a financial penalty on the operator. Since the amount involved in the non-compliance is quantifiable and substantial, the RBI imposes a penalty that is twice the amount of the funds involved in the contravention, which exceeds the alternative penalty of five lakh rupees.

Before imposing the penalty, the RBI, following Section 30(2), serves a notice to the payment system operator, giving them a chance to present their case and explain why the penalty should not be applied.

If the operator fails to pay the penalty within 30 days, as stated in Section 30(3), the RBI can approach the principal civil court to get a direction for recovery of the penalty amount.

Furthermore, as per Section 30(4), the RBI has the option to directly debit the penalty from the operator's current account or liquidate any securities the operator holds.

Finally, if the payment system operator has already been taken to court for this contravention, as mentioned in Section 30(6), the RBI cannot impose an additional penalty under this section until the court proceedings are concluded.