Under which Act does the Reserve Bank of India regulate and supervise payment systems in the country?
- A.The Banking Regulation Act, 1949
- B.The Payment and Settlement Systems Act, 2007
- C.The Negotiable Instruments Act, 1881
- D.The Reserve Bank of India Act, 1934
Correct answer
Explanation
The correct answer is B, the Payment and Settlement Systems Act, 2007. This Act designates the Reserve Bank as the authority for payment systems, makes its authorisation necessary before any payment system may be operated, and provides for the Board for Regulation and Supervision of Payment and Settlement Systems. Option A is wrong because the Banking Regulation Act of 1949 governs the licensing, management and business of banking companies. Option C is wrong because the Negotiable Instruments Act of 1881 deals with cheques, bills of exchange and promissory notes, and it is under its section 138 that a dishonoured cheque becomes an offence. Option D is wrong because the Reserve Bank of India Act of 1934 established the Reserve Bank itself and deals with currency and monetary matters. The year 2007 for payments and 1881 for cheques are the two dates worth fixing.
Read the full article: Payment Systems in India: NEFT, RTGS and IMPS Notes
Practice Questions
View allWhat is the minimum amount that can be remitted through RTGS?
- A.Ten thousand rupees
- B.One lakh rupees
- C.Two lakh rupees
- D.Five lakh rupees
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RTGS is meant for large value payments, and the Reserve Bank has fixed a floor of two lakh rupees for a remittance through it, while setting no ceiling of its own on the amount.
Read the full explanation →NEFT stands for:
- A.National Electronic Funds Transfer
- B.New Electronic Fund Transaction
- C.National Exchange of Funds and Transfers
- D.Net Electronic Financial Transfer
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NEFT is the nationwide system operated by the Reserve Bank of India for transferring funds from one bank account to another, settled on a deferred net basis in half hourly batches and available on all days of the year since December 2019.
Read the full explanation →In which payment system is each transaction settled individually and in real time, without being grouped into batches?
- A.NEFT
- B.RTGS
- C.NACH
- D.Cheque Truncation System
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The words in the name say it: real time means the instruction is carried out as it is received, and gross settlement means each instruction is settled by itself rather than set off against others.
Read the full explanation →The Immediate Payment Service (IMPS) is operated by:
- A.The Reserve Bank of India
- B.The State Bank of India
- C.The National Payments Corporation of India
- D.The Indian Banks Association
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IMPS was launched by that organisation in 2010 and was the first Indian system to offer interbank transfer instantly at any hour, including Sundays and holidays.
Read the full explanation →How is a NEFT transaction settled?
- A.Individually, the moment it is received
- B.On a deferred net basis, in half hourly batches
- C.Only at the end of the working day
- D.Only after the beneficiary bank confirms it
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NEFT holds instructions for a short period, works out what each bank owes the others on balance, and settles only that difference; the batches run every half hour through all twenty four hours, since the service was made available on all days of the year in December 2019.
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