BANK PROMOTION QUIZ :"Payment and Settlement Systems Act, 2007,".

PSS Act, 2007 MCQs for Bank Promotion

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Question 1

The Payment and Settlement Systems Act, 2007 (PSS Act, 2007) came into force with effect from which date?

20th December 2007 1st April 2008 12th August 2008 20th May 2025

Answer: (c) 12th August 2008. The Act received presidential assent on 20th December 2007 but became operative from 12th August 2008.

Question 2

Which authority is designated for the regulation and supervision of payment systems in India under the PSS Act, 2007?

Ministry of Finance Reserve Bank of India (RBI) Securities and Exchange Board of India (SEBI) Central Government

Answer: (b) Reserve Bank of India (RBI). The Act vests regulatory and supervisory powers in the RBI through the Payments Regulatory Board.

Question 3

What is the application fee to be submitted to the RBI for obtaining authorization to commence a payment system?

No fee is required ₹1,000/- (including GST) ₹10,000/- (excluding applicable GST) ₹1,00,000/- (excluding applicable GST)

Answer: (c) ₹10,000/- (excluding applicable GST). The fee can be remitted via cash, cheque, demand draft, payment order, or electronic transfer.

Question 4

As per the explanation in the PSS Act, a “payment system” includes various operations but does NOT include a:

Credit card operation Money transfer operation Stock exchange Debit card operation

Answer: (c) Stock exchange. Section 34 of the PSS Act specifically excludes stock exchanges and their clearing corporations from its ambit.

Question 5

If the RBI refuses or revokes an authorization for a payment system, an aggrieved applicant can appeal to which authority?

The Supreme Court of India A special tribunal constituted by RBI The Ministry of Finance The Central Government

Answer: (d) The Central Government. Section 9 provides a 30-day window to appeal to the Central Government.

Question 6

What is the time limit for an aggrieved system provider to appeal to the Central Government against an order of revocation by the RBI?

Within 15 days Within 30 days Within 60 days Within 90 days

Answer: (b) Within 30 days from the date on which the order is conveyed.

Question 7

The dishonour of an electronic fund transfer due to insufficiency of funds is an offence punishable under which Section of the PSS Act, 2007?

Section 8 Section 17 Section 25 Section 30

Answer: (c) Section 25. The provision mirrors the treatment for cheque dishonour under the Negotiable Instruments Act, 1881.

Question 8

The RBI will endeavour to dispose of all applications received for authorization of a payment system within what period?

30 days 90 days Six months One year

Answer: (c) Six months from the date of receipt of the application.

Question 9

The PSS Act, 2007, provides the legal basis for which two crucial concepts in payment systems?

Authorization and Revocation Netting and Settlement Finality Systemic Risk and Security Deposit Inspection and Direction

Answer: (b) Netting and Settlement Finality. The Act confers finality and irrevocability to settlements, enhancing systemic confidence.

Question 10

According to the PSS Act, who can operate a payment system in India?

Only the Reserve Bank of India Only domestic entities authorized by RBI Only foreign entities with a presence in India Any person, domestic or foreign, with authorization from RBI

Answer: (d) Any person, domestic or foreign, with authorization from RBI. Section 4 prohibits operation without authorization but does not discriminate by nationality.

Question 11

In case of a dispute between a system participant and a system provider, where is the dispute referred for a final and binding decision?

A panel created by the system provider The Central Government The Reserve Bank of India (RBI) The Civil Court

Answer: (c) The Reserve Bank of India (RBI). After panel adjudication, disputes escalate to RBI whose decision is final (Section 24).

Question 12

Under the dispute settlement mechanism of the PSS Act, if the RBI is itself a party to the dispute, who adjudicates the matter?

The Supreme Court The Central Government An independent arbitrator The Payments Regulatory Board

Answer: (b) The Central Government. This ensures neutrality when the RBI is a litigant (Section 24).

Question 13

The power of the RBI to revoke an authorization given to a payment system provider is detailed in which section of the PSS Act?

Section 7 Section 8 Section 9 Section 10

Answer: (b) Section 8. Grounds include contravention of the Act, non-compliance with directions, or violation of authorization terms.

Question 14

What is the definition of a Financial Market Infrastructure (FMI) as per the RBI framework?

Any bank providing payment services Any entity providing cross-border remittances A multilateral system for clearing, settling, or recording transactions A retail payment system like UPI

Answer: (c) A multilateral system for clearing, settling, or recording transactions. FMIs include CCPs, CSDs, SSSs, and TRs, subject to PFMI standards.

Question 15

Which section of the PSS Act, 2007 empowers the RBI to lay down standards for payment systems?

Section 7 (Authorization) Section 10 (Power to determine standards) Section 14 (Power to call for information) Section 17 (Power to issue directions)

Answer: (b) Section 10 (Power to determine standards). It covers format, size, timing, membership criteria, and participation terms.

Note: These questions are intended for learning support. For definitive interpretations, consult the Payment and Settlement Systems Act, 2007 and relevant RBI regulations.