Every person to whom a direction has been issued by the Reserve Bank under this Act shall comply with such direction without any delay and a report of compliance shall be furnished to the Reserve Bank within the time allowed by it.
Simplified Explanation
Section 19 of the Payment and Settlement Systems Act, 2007 mandates that any person to whom the Reserve Bank of India (RBI) issues directions under the Act must comply with those directions without delay. Additionally, the person must submit a report of compliance within the time frame specified by the RBI.
Key Provisions of Section 19:
- Mandatory Compliance:
- If the RBI issues directions to a system provider, participant, or any other entity under the provisions of this Act, that person or entity is legally required to comply with the direction promptly.
- The direction must be followed without any delay, emphasizing the importance of swift and full adherence to the regulatory instructions issued by the RBI.
- Compliance Report:
- The person or entity who has received the direction must submit a report confirming compliance to the RBI.
- The report must be provided within the time period specified by the RBI, ensuring that the regulatory body can verify the timely implementation of its directions.
Purpose of Section 19:
- Ensures Timely Adherence: The section ensures that all persons subject to the RBI’s directions act quickly to align with regulatory requirements. Delays in compliance could affect the stability or smooth operation of the payment system, so immediate action is critical.
- Accountability and Transparency: By requiring a report of compliance, the RBI maintains a mechanism to track and monitor how its directions are being implemented, ensuring that the entities under its oversight remain accountable.
- Regulatory Authority: This section underscores the RBI’s authority to enforce its regulations and ensures that its directions are not just advisory but mandatory, with clear expectations of action and reporting.
Consequences of Non-Compliance:
- While the section itself does not specify penalties or actions for non-compliance, failure to comply with directions can lead to further regulatory action, including the revocation of authorizations, imposition of fines, or other legal consequences as per the broader framework of the Payment and Settlement Systems Act.
In Summary:
Section 19 reinforces the enforceability of directions issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007. It obligates entities to comply with the RBI’s directions promptly and to submit a report of compliance within the prescribed time, thereby ensuring effective regulation and the smooth functioning of payment systems.
