Discuss in brief the important aspects of Payments and Settlement Act 2007 in day-to-day banking activities and lending process of Banks.

The objectives of the Payment and Settlement Systems Act, 2007 are to provide regulation and supervision of payment methods in India. Section 58 empowers the bank to make regulations for giving effect to the provisions of the Act and Clause (g) and sub section (2) thereof provides for making provisions for regulation of clearing houses for the banks including post office saving banks. The regulation of payment systems has become important in the context of electronic payment systems and probability of complication in the absence of a suitable regulatory framework with statutory backing. The Information Technology Act amended the Reserve Bank of India act, inserting the clause in Section 58(2) empowering the Reserve Bank to frame regulations relating to payments system of banks and financial institutions. The Act also provides the legal basis for netting and settlement finality. This is of great importance as in India, other than the Real Time Gross Settlement system all made by the Reserve Bank of India namely, the Board for Regulation and Supervision of Payment and Settlement System Regulation 2008 and Payment and Settlement of System Regulations 2008. Both these regulations came in to force along with Payment Settlement Act, 2007 and 12th August 2008. The Payment and Settlement Systems Regulations covers matters like form of application for authorization for commencing /carrying on a payment system and grant of authorization, payment instruction and determination of standards of payment systems, furnishing of returns/documents/ other information, furnishing of accounts and balance sheets by system provider etc.