"The Payments and Settlement Systems (Amendment) Bill, 2014" was passed today by Rajya Sabha by voice vote, with members cutting across party lines extending their support to the bill. The bill was earlier passed by Lok Sabha.
Moving the amended bill, Finance Minister Arun Jaitley said it was needed to address the issue of insolvency so that there is protection for payments.
The amendment to the Payment and Settlement Systems Act, 2007, was proposed to update the regulations in line with globally accepted standards.
"The amendments to the said Act have been proposed to increase transparency and stability of Indian financial markets in line with globally accepted norms," the bill's objectives state.
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As per the objectives of the bill, given the markets being served by the Clearing Corporation of India Limited, the participating banks run significant exposures against the said Corporation, in its role as central counter party. Hence, it is necessary to provide a sound and enforceable legal basis for "netting" of banks exposures to said Corporation so that their exposure is reduced significantly.
"The proposed amendments on enforceability of netting in the event of insolvency or dissolution of the system provider would provide finality to the determination of the payment obligations and settlement instructions between a central counter party and system participants in the event of insolvency, dissolution or winding up of a central counter party," the bill's objectives state.
Others who spoke in favour of the bill included Vivek Gupta (TMC), A W Rabi Bernard (AIADMK), Anil Desai (Shiv Sena), Bhupinder Singh (BJD) and Naresh Agrawal (SP).