Payment system not to operate without authorisation
Section 4 of the Payment and Settlement Systems Act, 2007 deals with payment system not to operate without authorisation. No person, other than the Reserve Bank, shall commence or operate a payment system except under and in accordance with an authorisation issued by the Reserve Bank under the provisions of this Act: Provided that nothing contained in this section shall apply to-- (a) the continued operation of an exis The Act came into force on 12 Aug 2008.
(1) No person, other than the Reserve Bank, shall commence or operate a payment system except under and in accordance with an authorisation issued by the Reserve Bank under the provisions of this Act:
Provided that nothing contained in this section shall apply to--
(a) the continued operation of an existing payment system on commencement of this Act for a period not exceeding six months from such commencement, unless within such period, the operator of such payment system obtains an authorisation under this Act or the application for authorisation made under section 7 of this Act is refused by the Reserve Bank;
(b) any person acting as the duly appointed agent of another person to whom the payment is due;
(c) a company accepting payments either from its holding company or any of its subsidiary companies or from any other company which is also a subsidiary of the same holding company;
(d) any other person whom the Reserve Bank may, after considering the interests of monetary policy or efficient operation of payment systems, the size of any payment system or for any other reason, by notification, exempt from the provisions of this section.
(2) The Reserve Bank may, under sub-section (1) of this section, authorise a company or corporation to operate or regulate the existing clearing houses or new clearing houses of banks in order to have a common retail clearing house system for the banks throughout the country:
Provided, however, that not less than fifty-one per cent. of the equity of such company or corporation shall be held by public sector banks.
"Explanation".--For the purposes of this clause, "public sector banks" shall include a "corresponding new bank", "State Bank of India" and "subsidiary bank" as defined in section 5 of the Banking Regulation Act, 1949 (10 of 1949).
Section 4, The Payment and Settlement Systems Act, 2007 (Act 51 of 2007).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Internet and Mobile Association of India v. Reserve Bank of India
Court's Decision & Legal Precedent
Judgement of Main Case order-16.pdf 2020-03-04 (not same-date ROP order-17). WP(C) 528/2018. Banking Regulation Act s.35A directions must satisfy proportionality. RBI's circular cutting regulated entities off from cryptocurrency trade was ultra vires that standard (a complete banking ban when less restrictive means existed). Map banking-regulation-act-1949 35A.
On this section: s.4 payment system not to operate without authorisation — judgment maps the statutory authorisation gateway and RBI’s PSS role while striking the circular on proportionality.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 4
What have the courts held on Section 4 of the Payment and Settlement Systems Act?
Internet and Mobile Association of India v. Reserve Bank of India (04 Mar 2020) is the leading judgment on this section among those set out below: s.4 payment system not to operate without authorisation — judgment maps the statutory authorisation gateway and RBI’s PSS role while striking the circular on proportionality.
How do I find court cases under Section 4 of the Payment and Settlement Systems Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Payment and Settlement Systems Act 4, section 4 Payment and Settlement Systems Act, section 4 of the Payment and Settlement Systems Act. People searching for it also type payment and settlement systems act 2007 section 4. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Internet and Mobile Association of India v. Reserve Bank of India (04 Mar 2020).
What should I read with Section 4 of the Payment and Settlement Systems Act, and has it changed?
Its own text turns on section 7 (Issue or refusal of authorisation), so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it.
When did Section 4 of the Payment and Settlement Systems Act come into force?
Section 4 of the Payment and Settlement Systems Act, cited as Payment and Settlement Systems Act 4, came into force on 12 Aug 2008, having been enacted on 20 Dec 2007. It is in force as at the date shown on this page.
Other sections of this Act
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 18 Oct 2026. This page is not a substitute for legal advice.