Under which Act does the Reserve Bank of India authorise and supervise payment systems in the country?
- A.Banking Regulation Act, 1949
- B.Negotiable Instruments Act, 1881
- C.Payment and Settlement Systems Act, 2007
- D.Reserve Bank of India Act, 1934
Correct answer
Explanation
The correct answer is C, the Payment and Settlement Systems Act, 2007. Under this Act no person may commence or operate a payment system in India without authorisation from the Reserve Bank, and it created the Board for Regulation and Supervision of Payment and Settlement Systems within the RBI. Option A is wrong because the Banking Regulation Act of 1949 governs the licensing and working of banks as banks, not payment systems as such. Option B is wrong because the Negotiable Instruments Act of 1881 deals with cheques, bills of exchange and promissory notes, including the offence of dishonour. Option D is wrong because the RBI Act of 1934 constituted the central bank and covers currency issue and monetary matters. Questions pair the year 2007 with the system operators authorised under it, such as NPCI.
Read the full article: NPCI, UPI and RuPay: Retail Payment Systems of India
Practice Questions
View allThe National Payments Corporation of India was incorporated in which year?
- A.2005
- B.2008
- C.2012
- D.2016
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NPCI was incorporated in 2008 as a not for profit company under Section 25 of the Companies Act, 1956 to act as the umbrella organisation for all retail payment systems in India, and it began by taking over the National Financial Switch the following year.
Read the full explanation →NPCI was promoted by the Reserve Bank of India along with which other body?
- A.Securities and Exchange Board of India
- B.Indian Banks Association
- C.NITI Aayog
- D.Ministry of Electronics and Information Technology
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NPCI was set up on the initiative of the Reserve Bank of India together with the Indian Banks Association, and ten core promoter banks held its first shareholding, which is why it is owned by the banking industry rather than by the government.
Read the full explanation →The Unified Payments Interface was launched in which year?
- A.2010
- B.2012
- C.2016
- D.2019
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UPI was launched by NPCI in 2016, and the BHIM application followed in December of the same year, which is why 2016 is the single most asked year in this topic.
Read the full explanation →UPI was built as a layer on top of which existing payment system?
- A.RTGS
- B.NEFT
- C.IMPS
- D.NACH
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The Immediate Payment Service, launched in 2010, already moved money between banks instantly at every hour, and UPI uses that rail while adding the virtual payment address, interoperable applications and single click authentication.
Read the full explanation →In UPI, a virtual payment address is used so that the payer does not have to share which details?
- A.The bank account number and IFSC
- B.The Aadhaar number
- C.The PAN
- D.The mobile handset number
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A virtual payment address takes the form of a name followed by a bank handle and acts as a pointer to the underlying account, so a payment can be made or collected without revealing the account number or the branch code.
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