Question

Under Section 23 of the Payment and Settlement Systems Act, 2007, a large commercial bank, Bank Y, participates in a Clearing Corporation's net settlement system. On a particular settlement date, the Clearing Corporation determines that Bank Y owes ₹500 crores to the system after netting. That same evening, before actual payment is made, Bank Y is placed under moratorium by the RBI. The next morning, a liquidator is appointed, and Bank Y's creditors demand that the settlement determination be reopened on grounds that actual funds were not transferred. Which of the following correctly applies Section 23(3) to this scenario?

A The settlement determination can be reopened because actual payment was not made; settlement finality applies only after funds are physically transferred
B The settlement determination is final and irrevocable as soon as the net amount was determined by the Clearing Corporation, notwithstanding the subsequent moratorium or liquidation; the liquidator cannot reopen the settlement
C The settlement determination becomes final only if Bank Y voluntarily acknowledges the obligation; RBI moratorium automatically suspends settlement finality pending resolution
D The liquidator can reopen the settlement if creditors prove financial hardship caused by the original determination
E The settlement finality applies only to settlements explicitly documented in writing; electronic determinations can be challenged within 30 days
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