{"id":283253,"date":"2024-02-17T19:38:04","date_gmt":"2024-02-17T14:08:04","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=283253"},"modified":"2024-02-17T19:38:04","modified_gmt":"2024-02-17T14:08:04","slug":"on-the-rbi-putting-restraints-on-a-certain-card-network","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/on-the-rbi-putting-restraints-on-a-certain-card-network\/","title":{"rendered":"On the RBI putting restraints on a certain card network"},"content":{"rendered":"

Source:<\/strong> This post on the RBI putting restraints on a certain card network has been created based on the article \u201cWhy has RBI put restraints on a certain card network?\u201d published in \u201cIndian Express<\/strong>\u201d on 17th<\/sup> February 2024.<\/p>\n

UPSC Syllabus Topic: <\/strong>GS Paper 2 Indian Polity – Statutory, regulatory and various quasi-judicial bodies.<\/p>\n

News:<\/strong> The article discusses the recent decision of the RBI to put restraints on a certain card network in India due to concerns over wrongdoings.<\/p>\n

Read in detail about Payment Regulation in India<\/strong> here<\/a>.<\/p>\n

Background:<\/strong><\/p>\n

There are 5 card networks in India: Visa, Mastercard, RuPay, Diners Club, AmEx. RBI has ordered a certain card network (without naming it) to stop \u201cunauthorised payments\u201d made using business cards.<\/p>\n

Note:<\/strong> Card networks<\/strong> connect banks, merchants, and customers (card users) to one another so that transactions can be carried out smoothly and securely.<\/p>\n

What are the reasons behind the RBI order?<\/strong><\/h2>\n
    \n
  1. Payments to Non-Card-Accepting Entities: <\/strong>The network was accepting card payments from corporates for their commercial payments, and was then remitting the funds (via IMPS, RTGS, or NEFT) to non-card accepting recipients.
    \nSuch a payment system requires authorisation, which had not been obtained. This is a violation of the Payment and Settlement Systems (PSS) Act, 2007<\/strong>.<\/li>\n
  2. Non-Compliance of KYC Norms: <\/strong>RBI also raised concerns over non-compliance of Know Your Customer (KYC) norms<\/strong> in such transactions.<\/li>\n<\/ol>\n

    What are the RBI\u2019s concerns?<\/strong><\/h2>\n

    1) First<\/strong>, the card network put a large amount of funds into an account that was not a designated account under the PSS Act.<\/p>\n

    2) Second<\/strong>, these transactions did not comply with the \u2018originator and beneficiary information\u2019 requirements, as required under the \u2018Master Direction on KYC\u2019 issued by the RBI.<\/p>\n

    Question for practice:<\/strong><\/p>\n

    Why has the RBI ordered a certain card network to stop \u201cunauthorised payments\u201d made using business cards?<\/p>\n","protected":false},"excerpt":{"rendered":"

    Source: This post on the RBI putting restraints on a certain card network has been created based on the article \u201cWhy has RBI put restraints on a certain card network?\u201d published in \u201cIndian Express\u201d on 17th February 2024. UPSC Syllabus Topic: GS Paper 2 Indian Polity – Statutory, regulatory and various quasi-judicial bodies. News: The… Continue reading On the RBI putting restraints on a certain card network<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[212,10500,225],"class_list":["post-283253","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-2","tag-indian-express","tag-polity","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/283253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=283253"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/283253\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=283253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=283253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=283253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}