Revolutionizing Penalties and Power: Jan Vishwas Amendments and its Impact on Payment Systems Act

The Jan Vishwas (Amendment of Provisions) Act, 2023 (“JV Act”) which received the assent from the President of India on 11^th August 2023 amends 42 acts with an intention to decriminalize and rationalize minor offences and aims to “enhance trust- based governance for ease of living and doing business.”. The JV Act has a notable impact on crucial regulations including without limitation, the Payment and Settlement Systems Act, 2007 (“PSS Act”). The JV Act has sought to bring about substantial modifications pertaining to penalties and regulatory powers wielded by the Reserve Bank of India (“RBI”).

With the rise and domination of the digital realm, the PSS Act intends to strike a balance between innovation and regulation by providing a secure and reliable digital payment system. The ever-increasing volume of financial transactions necessitated a comprehensive legal framework which led to the enactment of the PSS Act and provided for vigilant regulatory supervision.

The establishment of the payment and settlement systems has reformed online transactions, attaining a more efficient, streamlined and swift mechanism. The PSS Act encompasses stringent regulatory measures which are essential to curb potential fraud and cyber risks that are intrinsic in the digital realm.

The PSS Act at its core fosters an equitable playing field and does not impose restrictions on international payment systems seeking authorization to commence operations in India. RBI is conferred with the regulatory power to lay down policies relating to the regulation of payment systems including domestic and international payment systems affecting domestic transactions. This approach underscores and facilitates cross-border collaborations and investment in India’s financial technology sector.

The amendments brought forth in the JV Act are tailored in accordance with the evolving digital landscape imposing hefty penalties on people who fail to comply with the provisions of the PSS Act. The amendments sought are summarized in the table below along with an analysis of the modifications.

Conclusion: The amendments introduced by the JV Act fosters uniformity with respect to penalty imposition and simplify the regulatory process, enhancing further compliance. In addition, it also empowers RBI to enforce stricter supervision, reflecting an effort to deter non-compliance of the provisions of the PSS Act. The amendments ensure that the integrity of the payment and settlement systems is maintained and has significantly bolstered the regulatory framework.