PARLIAMENTARY REPORT
INDIA
Corporation, in its role as central counter party. Hence, it was felt 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 said Act, though providing for netting protection and settlement finality in the event of insolvency or dissolution of system participants, did not expressly contemplate a situation which may warrant netting on account of insolvency or dissolution of the central counter party itself. 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.
Further, it was felt that these were some legal difficulties in securing the customers’ interest held in escrowed accounts in the event of insolvency or bankruptcy of prepaid instruments, operators, which are required to be addressed.
The Government accordingly brought forward the Payment and Settlement Systems (Amendment) Bill, 2014 proposing amendments to increase transparency and stability of Indian financial markets in line with globally accepted norms.
Core provisions of the Amending Bill • Sub-section (4) of section 23 of Principal Act to be amended to provide that where by an order of the court, Tribunal or authority, the system participant is declared as insolvent or is dissolved or wound up, such order shall not affect any settlement that has become final and irrevocable prior to such order or immediately thereafter.
• A new sub-section (5) in section 23 of the Principal Act inserted so as to provide that where an order under sub-section (4) of section 23 is made with respect to a “central counter party”, the payment obligations and settlement instructions between the central counter party and the system participants shall be determined by such central counter party in accordance with the gross or netting procedure, as the case may be, approved by the Reserve Bank of India.
• A new sub-section (6) in section 23 of the Principal Act inserted so as to provide that the liquidator or receiver of the central counter party shall not re-open the determination which has become final and irrevocable and after appropriating the collateral provided by system participants towards their settlement obligations, return the excess collaterals to system participants.
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• A new section 23A relating to “protection of funds collected from the customers by the payment system providers”, inserted.
• A new section 34A inserted so as to apply the said Act to the designated trade repository and legal entity identifier issuer.
The Amending Bill was passed by Lok Sabha on 9 December 2014 and by Rajya Sabha with amendments on 27 April 2015. The Amendments made by Rajya Sabha were agreed to by Lok Sabha on 5 May 2015. The Bill as passed by both Houses of Parliament was assented to by the President of India on 13 May 2015.
The Repealing and Amending (Second) Bill, 2014
As a periodical measure, enactments which have ceased to be in force or have become obsolete or the retention whereof as separate Act is found unnecessary, are either repealed or in case where formal defects are detected in enactments are corrected.
In furtherance of this endeavour the Government brought forward the Repealing and Amending (Second) Bill, 2014.
Highlights of the Repealing Amending Bill The following Bills as set out in First Schedule of the Amending Bill had been proposed to be amended:- • The Export-Import Bank of India (Amendment) Act, 1998 • The High Court and Supreme Court Judges (Salaries and Conditions of Service) Amendment Act, 1998
• The Salary, Allowances and Pension of Members of Parliament (Amendment) Act, 1999
• The Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000
• The Small Industries Development Bank of India (Amendment) Act, 2000
• The Food Corporations (Amendment) Act, 2000 • The National Housing Bank (Amendment) Act, 2000 • The Salary, Allowances and Pensions of Members of Parliament (Amendment) Act, 2000
• The Leaders and Chief Whips of Recoginised Parties and Groups in Parliament (Facilities) Amendment Act, 2000
• The Major Port Trusts (Amendment) Act, 2000 • The Insecticides (Amendment) Act, 2000 • The Border Security Force (Amendment) Act, 2000 • The State Financial Corporations (Amendment) Act, 2000 • The Multimodal Transportation of Goods (Amendment) Act, 2000
• The National Bank for Agriculture and Rural Development (Amendment) Act, 2000
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