The Payment and Settlement Systems Act, 2007
Administered Ministry: Ministry of Finance / Department of Financial Services
Act details
| Short title | The Payment and Settlement Systems Act, 2007 |
|---|---|
| Long title | An Act to provide for the regulation and supervision of payment systems in India and to designate the Reserve Bank of India as the authority for that purpose and for matters connected therewith or incidental thereto. |
| Act number | 51 of 2007 |
| Act year | 2007 |
| Enactment date | 20 Dec 2007 |
| Ministry | Ministry of Finance / Department of Financial Services |
| Department | Department of Financial Services |
| Jurisdiction | Central (Parliament of India) |
| Sections | 42 |
| Status | Not repealed |
| Last checked on India Code | 29 Oct 2026 |
| Source | India Code, Government of India |
Summary
Summary of the Payment and Settlement Systems Act, 2007
Key Provisions
1. Settlement Commission
• Empowers the Settlement Commission to send cases back to the Central Excise Officer if the applicant hasn’t cooperated, with the officer entitled to use all materials produced before the Commission.
• Orders of settlement are conclusive on stated matters.
• Sums due under settlement orders are recoverable as if due to the Central Government.
• Bars subsequent settlement applications under certain conditions (penalty for concealment, conviction for an offence, or case sent back).
2. Commissioner of Payments
Appointment & Powers: A Commissioner of Payments is appointed for disbursing amounts to a Company, with powers to manage a deposit account and prioritize claims.
• Payment Process: The Central Government pays the Commissioner, who manages claims with defined priorities.
• Claim Process: Claims against the Company must be made within a specified period, with the Commissioner examining and admitting/rejecting them based on priorities.
Legislative history
Legislative History:
The Payment and Settlement Systems Act, 2007
Short Title The Payment and Settlement Systems Act, 2007
Act Number / Year Act No. 51 of 2007
Act ID (India Code) 200751
Presidential Assent Date December 20, 2007
Enforcement Date August 12, 2008
Nodal Ministry Ministry of Finance
Precedent & Statutory Rationale
1. Fragmentation of Legacy Oversight:
o Prior to 2007, India’s payment and settlement mechanisms—including paper-based clearing, card networks, and early electronic fund transfers—operated without a unified, dedicated statutory framework. Regulation was scattered across various administrative guidelines or general banking laws, leaving systemic vulnerabilities unaddressed.
2. Mitigating Systemic Risk and Providing Legal Clarity:
o With the rapid growth of electronic transactions, automated clearing houses, and high-value financial transfers, the legislature recognized an urgent need for a comprehensive legal architecture. The Act was formulated to grant explicit legal recognition to transaction netting and settlement finality, protect against systemic financial collapse, and safeguard consumer interests.
Parliamentary Trajectory & Enactment
• Formulation: Drafted and piloted by the Ministry of Finance in close coordination with the Reserve Bank of India (RBI) to establish an institutional baseline for secure financial commerce.
• Parliamentary Passage: Tabled, debated, and passed by both Houses of Parliament during the winter session of 2007.
• Presidential Assent: Received formal Presidential Assent on December 20, 2007, entering the statute book as Act No. 51 of 2007.
• Enforcement: Enforced on August 12, 2008.
• Source: India Code and Ministry of Finance Official Records