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      Question

      Under Section 4 of the Payment and Settlement Systems

      Act, 2007, which of the following correctly states the requirement for operating a payment system in India?
      A Any bank or financial institution regulated by the RBI is deemed to have automatic authorisation to operate a payment system without any separate application Correct Answer Incorrect Answer
      B A payment system can be operated with prior intimation to the RBI within 30 days of commencement of operations, subject to post-facto approval Correct Answer Incorrect Answer
      C No person, other than the RBI itself, shall commence or operate a payment system except under and in accordance with an authorisation issued by the RBI under the PSS Act Correct Answer Incorrect Answer
      D Only entities incorporated in India may apply for authorisation; foreign-owned entities are excluded from operating payment systems in India Correct Answer Incorrect Answer

      Solution

      Section 4 of the Payment and Settlement Systems Act, 2007 is an absolute prohibition no person shall commence or operate a payment system in India except under and in accordance with an authorisation granted by the RBI. This applies to all entities including banks, financial institutions, and non-bank entities. The RBI, as the designated authority under Section 3 of the Act, is the sole regulator and supervisor of all payment systems in India.

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