What changed
RBI issued a directive under section 10(2), read with section 23 of the PSS Act 2007 requiring all multilateral and deferred net settlement systems to have legal certainty for netting and settlement finality. The directive also mandates uniform default handling procedures across all RBI-approved systems and Bankers' Clearing Houses.
What it means for you
Banks and payment system providers must now ensure their net settlement systems comply with statutory finality and default handling rules. This reduces legal risk and systemic risk by making settlement irrevocable once obligations are determined. It also brings transparency and consistency in handling participant defaults across all authorized systems.
What you must do
- Review your multilateral/deferred net settlement systems (Cheques, ECS, NEFT) for compliance with the directive's settlement finality and default handling procedures.
- Update internal policies and procedural guidelines to align with the statutory netting and finality provisions under the PSS Act 2007.
- Ensure all Bankers' Clearing Houses managed by your bank adopt the uniform default handling procedures as prescribed.
Who it affects
All banks managing Bankers' Clearing Houses, Payment system providers of multilateral/deferred net settlement systems, System participants in Cheques, ECS, NEFT
What is the key legal change introduced by this directive?
The directive gives statutory recognition to netting and settlement finality under section 23 of the Act, making settlement irrevocable once obligations are determined, even if not yet paid.