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2022 (10) TMI 508 - HC - Indian LawsValidity of circular of RBI - directions issued to online payment gateway services - non-banking entities which offer payment aggregation services - main plank of the petitioners’ case rests on the argument, that PAs who perform the work of intermediaries do not fall within the scope and ambit of the definition of “payment system” incorporated in the 2007 Act - HELD THAT:- Once it is held, that the work function of the PAs comes within the definition of a payment system, then axiomatically, the power to have them seek authorization from the RBI for operating as PAs gets traced to section 4 of the 2007 Act - there are no merit in the argument, that petitioner no. 1, if it chooses to function as a PA, should not be called upon to seek authorization from RBI, as per the criteria laid down in Clause 3 of the 2020 Guidelines. There are no merit in the submissions advanced on behalf of the petitioners concerning Clause 4 of the 2020 Guidelines, which obliges an applicant, who wishes to function as a PA, to have a minimum net worth of Rs.15 crores and have the same scaled up to Rs. 25 crores by the end of the third FY. RBI has demonstrated, that before the 2020 Guidelines were issued, the same was put up in the public domain in the form of a Discussion paper. The responses received were duly analysed, and as a matter of fact, the criteria contained therein were sculpted and moderated. Thus, in our view, the argument advanced qua fixing of a threshold limit vis-à-vis minimum net worth seems untenable - there is merit in RBI's stand, that since PAs will handle funds provided by customers, RBI would require such applicants to enter the industry who have some amount of financial wherewithal. The 2009 Directions involved an indirect regulation and supervision of PAs. However, after RBI had put its Discussion paper in the public domain, the responses received by it were examined internally by the Board. The result of such deliberation convinced the RBI, that it should work on the third option outlined in the Discussion paper i.e., that which involved RBI's direct regulation and supervision of PAs since they were handling funds of customers. The difficulties put forth on behalf of PAs, perhaps are a small wrinkle, which cannot be the reason for striking down the impugned clauses of the 2020 Guidelines. The public interest element, which is imbued in the framing of the Guidelines, trumps the concerns raised by the petitioners. There are no merit in the writ petition - petition dismissed.
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