Lok Sabha Question No. 1079 (UNSTARRED), answered on 2017-02-08
Subject: Legality of E-payment Companies
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: SHOBHA KARANDLAJE, PRATHAP SIMHA, BAIJAYANT "JAY" PANDA

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 1079

TO BE ANSWERED ON: 08.02.2017

## LEGALITY OF E-PAYMENT COMPANIES

## 1079 KUMARI SHOBHA KARANDLAJE: SHRI PRATHAP SIMHA: SHRI BAIJAYANT JAY PANDA:

Will the Minister of ELECTRONICS AND INFORMATION TECHNOLOGY be pleased to state: -

- (a) the legal status of online cash transactions in India;
- (b) whether the provisions in Acts like Payment Settlements and Systems Act, 2007 (PSS Act), the Information Technology Act, 2008 and the Indian Penal Code for protection of users in case of digital payments and mobile wallets are sufficient to protect the digital wallets users;
- (c) whether  the  Government  is  working  on  a  legal  framework  that  will  define  the  liabilities  and obligations of e-payment companies;
- (d) if so, the details thereof including salient features of the draft law being framed; and
- (e) whether  the  Government  is  considering  to  amend  the  IT  Act,  2000  to  address  key  issues  to protect  the  privacy  and  financial  details  of  people  using  electronic  payments  and  if  so,  the details thereof?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI P. P. CHAUDHARY)

(a) to (d):   - The RBI, under the Payment and Settlement Systems Act, 2007, has authorised payment system operators for providing various payment services, including e-wallet.

-  Under section 4, the RBI authorises various types of payment systems, including wallets. Also, under specific provisions of the Act, RBI has the powers to set standards and issue directions / guidelines to various  payment  system  operators.  For  instance,  RBI  has  issued  guidelines  /  directions  /  circulars regarding safety, security, risk mitigation measures, etc. All the authorised payment system operators are required to get the system audit done from a CISA/DISA qualified auditor on an annual basis. RBI has vide  circular  RBI/2016-17/178,  DPSS.CO.OSD.No.1485/06.08.005/2016-17  dated  9 th December  2016 advised  all  Prepaid  Payment  Instrument  Issuers,  System  Providers,  System  Participants  and  all  other Prospective Prepaid Payment Instrument Issuers to carry out a special audit by the empanelled auditors of Indian Computer Emergency Response Team (CERT-In) on a priority basis and take immediate steps thereafter to comply with the findings of the audit report.   The non-banks which are authorised to issue prepaid payment instruments, including wallets, are required to maintain their outstanding balance in an escrow account with any scheduled commercial bank.

-      The  Information  Technology  (IT)  Act,  2000  provides  legal  framework  for  data  security  breach. Section  43,  section  43A,  section  72  and  section  72A  of  the  IT  Act,  2000  provides  for  privacy  and security  of  data  in  digital  form.  The  act  also  provides  for  certain  due  diligence  to  be  followed  by intermediaries including publishing their terms and conditions, privacy policy, user agreement. The rules made under the IT Act also  cover appointing a grievance officer, procedure for reporting and redressal of complaints including the timelines etc.

- (e):  Currently there is no proposal with the Government to amend the IT Act, 2000.

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