finance

IFSCA's New 2024 Regulations for Payment and Settlement System Oversight

Introduction

On July 12, 2024, the International Financial Services Centre Authority (IFSCA) issued new regulations under Notification IFSCA/GN/2024/005. These regulations govern the Board for Regulation and Supervision of Payment and Settlement Systems, detailing its structure, responsibilities, powers, and operational protocols.

Overview of the Board

Composition and Structure

  • Chairperson: The IFSCA Chairperson serves as the Chair of the Board.
  • Members: The Board includes Whole Time Members and up to three additional nominated Members.
  • Vice-Chairperson: A Whole Time Member is designated as the Vice-Chairperson of the Board.

Responsibilities of the Board

The Board is tasked with regulating and supervising payment systems within International Financial Services Centres (IFSCs). Its specific functions include:

  • Policy Formulation: Establishing policies for the regulation of payment systems.
  • Standard Setting: Defining standards for both electronic and non-electronic payment systems, including domestic and cross-border processes.
  • Authorization: Granting authorization for new payment systems.
  • Membership Criteria: Determining criteria for membership, including guidelines for continuation, termination, or rejection.
  • Regulatory Oversight: Administering regulations and ensuring compliance among operators and system participants.

Key Provisions of the Regulations

Short Title and Commencement

  1. These regulations are referred to as the International Financial Services Centres Authority (Board for Regulation and Supervision of Payment and Settlement Systems) Regulations, 2024, effective upon publication in the Official Gazette.

Definitions

  1. Key definitions include:
    • "Act": Refers to the Payment and Settlement Systems Act, 2007 (51 of 2007).
    • "Authority": Defines the International Financial Services Centres Authority established under the 2019 Act.
    • "Board": Indicates the committee of Authority members overseeing payment systems.

Roles and Powers

  1. The Board holds authority to:
  • Propose necessary administrative structures for effective regulation.
  • Ensure consumer protection and overall payment system safety.

Administration and Meetings

  1. Authority Support: The Authority will provide required resources to the Board.
  2. Office Vacancies: Nominated Members who miss three consecutive Board meetings without leave will vacate their position.
  3. Powers Delegation: The Chairperson or Vice-Chairperson may perform Board functions. The Chairperson can delegate specific powers to Members.

Meeting Protocol

  1. Meeting Frequency: The Board convenes at least quarterly, with sufficient notice provided to Members.
  2. Quorum Requirements: A minimum of three Members, including the Chair and at least one nominated Member, are required for meetings.
  3. Advisory Committees: The Board can establish Sub-Committees or Advisory Committees to enhance its functions and invite experts in the field.

Reporting

  1. Quarterly Reports: The Board must submit quarterly reports on its activities to the Authority.

Conclusion

The newly established regulations by the IFSCA for the Board of Regulation and Supervision of Payment and Settlement Systems signify a structured approach toward managing payment systems within IFSCs. This initiative aims to enhance both supervision and consumer protection, essential for the effective governance of payment systems.