Under the PSS Act, 2007, dishonor of an electronic fund transfer
instruction due to insufficiency of funds in the account etc., is an
offence punishable with imprisonment or with fine or both, similar to
the dishonor of a cheque under the Negotiable Instruments Act 1881.
Subject to complying with the procedures laid down under the PSS Act,
2007, criminal prosecution of defaulter can be initiated in such cases.
This provision was introduced to discourage dishonour of electronic
payment instructions. (Section 25 of the Act).
Penalties -
Under the PSS Act, 2007, operating a payment
system without authorization, failure to comply with the terms of
authorization, failure to produce statements, returns information or
documents or providing false statement or information, disclosing
prohibited information, non-compliance of directions of Reserve Bank
violations of any of the provisions of the Act , Regulations, order,
directions etc., are offences punishable for which Reserve Bank can
initiate criminal prosecution. Reserve Bank is also empowered to impose
fine for certain contraventions under the Act. (Sections 26 and 30 of
the PSS Act, 2007).
