1. LEXIM ASSOCIATES Provisions of Payment & Settlement Systems Act, 2007 Jairam Chandnani January 05, 2008

2. LEXIM ASSOCIATES Definition of Electronic Fund Transfer (EFT)  Section 2(1)(c) defines electronic fund transfer as any transfer funds which is initiated by a person by way of instructions, authorization or order to a bank to debit or credit an account maintained with that bank through electronic means & included point of sale transfers, automated teller machine transactions, direct deposits or withdrawal of funds, transfer intimated by telephone, internet and card payment”

3. LEXIM ASSOCIATES Provisions Governing Dishonour of EFT  S.25 (1) states that “where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit of that account is insufficient to honour the transfer instruction or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this act be punished with imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of the electronic funds transferred or with both”

4. LEXIM ASSOCIATES Requisites for initiating action against dishonour of EFT 1.The EFT was initiated for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability; 2.The EFT was initiated in accordance with the relevant procedural guidelines issued by the system provider; 3.The beneficiary makes a demand for the payment of the said amount of money by giving a notice in writing to the person initiating the EFT within 30 days of the receipt of information by him from the bank concerned regarding the dishonour of the EFT; and 4.The person initiating the EFT fails to make the payment of the said money to the beneficiay within 15 days of the receipt of the said notice

5. LEXIM ASSOCIATES Provisions of Chapter XVII of the NI Act to apply  S. 25 (5) of the act provides that provisions of chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881), shall apply to the dishonour of EFT to the extent the circumstances permit.

6. LEXIM ASSOCIATES Presumption u/s 25(2)  U/s 25(2) of the said act “it shall be presumed, unless the contrary is proved, that the electronic funds transferred was initiated for the discharge, in whole or in part, of any debt or other liabilty.

7. LEXIM ASSOCIATES Cognizance of offence  S. 28(1) states that no court shall take cognizance of offence punishable under this act except upon a complaint in writing made by an officer of the RBI generally or especially authorised by it in writing in this behalf and no court, lower than that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any such offence –Provided that the court make take cognizance of the offence punishable u/s 25 upon a complaint in writing make by the person aggrieved by the dishonour of the EFT.

8. LEXIM ASSOCIATES Punishment  A person committing offence u/s 25 of this act shall without prejudice to any other provisions of this act be punished with imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of the electronic funds transferred or with both.

9. LEXIM ASSOCIATES Documents required for filing complaint 1.Copy of instructions, authorization or order to a bank to debit or credit account of the borrower. 2.Intimation of dishonour of EFT. 3.Copy of Demand Notice along with postal receipts and proof of Delivery thereof. 4.Power of attorney for complainant officer.

10. LEXIM ASSOCIATES Flow Chart