Updated: Monday May 13, 2013/AlEthnien
Rajab 04, 1434/Somavara
Vaisakha 23, 1935, at 09:09:33 PM
The Payment Systems and Electronic
Fund Transfers Act, 2007
“AN ACT
to
provide regulatory framework for payment systems and electronic fund transfers
WHEREAS
it is necessary to supervise and regulate Payment Systems and Electronic Fund
Transfers in Pakistan and to provide standards for protection of the consumer
and to determine respective rights and liabilities of the financial
institutions and other Service Providers, their consumers and participants;
It is
hereby enacted as follows:---
CHAPTER
I
PRELIMINARY
1. Short
title, extent and commencement.- (1) This Act may be called the Payment
Systems and Electronic Fund Transfers Act, 2007.
(2)
It extends to the whole of
(3)
It shall come into force at once.
2. Definitions.-
(1) In this Act, unless there is anything repugnant in the subject or context,---
(a) “Accepted
Card” means a card, code or other means of access to a Consumer’s Account
for the purpose of initiating Electronic Fund Transfers;
(b) “Access
Code” includes pin, password or code, which provides a means of access to a
Consumer’s Account for the purpose of initiating an Electronic Fund Transfer;
(c) “Account”
means a current deposit, saving deposit, or any other account maintained by
a consumer in a Financial Institution in which credits and debits may be
effected by virtue of Electronic Fund Transfers;
(d) “Authorized”
means authorized by the State Bank for the purposes of this Act;
(e) “Automated
Teller Machine (ATM) Card” means any card for use at any ATM to initiate
Electronic Fund Transfers.
(f) “Authorized Party” means a bank,
a Financial Institution, a Clearing House, a Service Provider or any person
authorized by the State Bank to transact business under this
Act in Pakistan;
(g) “Automated
Teller Machine (ATM) Operator” means any person or a Financial Institution
operating any ATM at which consumers initiate Electronic Fund Transfers;
(h) “Bank”
means a banking company as defined in section 5 of the Banking Companies Ordinance,
1962 (LVII of 1962);
(i) “Book
Entry Government Securities” means any securities issued by the Government
under any written law transferable by a book entry on a register or otherwise;
(j) “Business
Day” means any day on which offices of consumers, Financial Institutions,
operators or Service Providers involved in Electronic Fund Transfer are open to
the public;
(k) “Card”
means any card including an ATM card, Electronic Fund Transfer point of
sale card, debit card, credit card or stored value card, used by a Consumer to
effect an Electronic Fund Transfer;
(l) “Cheque
in the Electronic Form” means a cheque which contains the exact image of a
paper cheque in electronic form and is generated, written and signed in a
secure system ensuring minimum safety standards as may be prescribed by the
State Bank;
(m) “Clearing
House” means corporation, company, association, partnership, agency or
other entity that provides clearing or settlement services for a Payment
System;
(n) “Consumer”
means any person who or which avails the facility of Electronic Fund
Transfer;
(o) “Debit
Instrument” means a Card, Access Code, or other device other than a cheque,
draft or similar paper instrument, by the use of which a person may initiate an
Electronic Fund Transfer;
(p) “Designated
Payment Instrument” means a Payment Instrument designated by the State Bank
as Payment Instrument under section 12.
(q) “Designated
Payment System” means a Payment System designated by the State Bank under
section 4 to be a Designated Payment System for the purposes of this Act;
(r) “Electronic” has the same meaning
as assigned to it by the Electronic Transactions Ordinance, 2002 (LI of 2002);
(s) “Electronic
Fund or Electronic Money” means money transferred through an
Electronic Terminal, ATM, telephone instrument, computer, magnetic medium or
any other electronic device so as to order, instruct or authorize a banking
company, a Financial Institution or any other company or person to debit or
credit an account and includes monetary value as represented by a claim on the
issuer which is stored in an electronic device or Payment Instrument, issued on
receipt of funds of an amount not less in value than the monetary value issued,
accepted as means of payment by undertakings other than the issuer and includes
electronic store of monetary value on a electronic device that may be used for
making payments or as may be prescribed by the State Bank;
(t) “Electronic
Fund Transfer” means any transfer of funds, other than a transaction
originated by cheque, draft or similar paper instrument, which is initiated
through an Electronic Terminal, telephonic instrument, point-of -sale Terminal,
stored value card Terminal, debit card, ATM, computer magnetic tape or any
other electronic device so as to order, instruct, or authorize a Financial
Institution to debit or credit an Account;
(u) “Electronic
Money Institution” means an undertaking, that issues means of payment in
the form of Electronic Money and is duly authorized to do so;
(v) “Electronic
Payment System” means implementation of Payment System Electronically;
(w) “Electronic
Terminal” means an electronic device, operated by a consumer, through which
a consumer may initiate an Electronic Fund Transfer;
(x) “Financial
Institution” means a financial institution as defined in the Financial
Institutions (Recovery of Finances) Ordinance, 2001(XLVI of 2001) and includes
a banking company or any other Electronic Money Institution or person,
authorized by the State Bank in this behalf, that directly or indirectly holds
an account belonging to a consumer.
(y) “Government”
means the Federal Government or any Provincial Government;
(z) “Netting” means the conversion
into one net claim or one net obligation of claims and obligations resulting
from transfer orders which a participant either issues to, or receives from,
one or more other participants with the result that only a net claim can be demanded
or a net obligation be owed;
(za) “Operator”
means any financial or other institution or any person, authorized by the
State Bank to operate any Designated Payment System;
(zb) “Participant”
means a party to an arrangement that establishes a Payment System;
(zc) “Payment
Instrument” means any instrument, whether tangible or intangible, that
enables a person to obtain money, goods or services or to otherwise make
payment; but excludes Payment Instruments prescribed in Negotiable Instrument
Act, 1881(XXVI of 1881);
(zd) “Payment
System” inter-alia means a system relating to payment instruments, or
transfer, clearing, payment settlement, supervision, regulation or
infrastructure thereof and includes clearing, settlement or transfer of Book
Entry Government Securities;
(ze) “Person”
includes a legal person or a body of persons whether incorporated or not.
(zf) “Preauthorized
Electronic Fund Transfer” means an Electronic Fund Transfer Authorized in
advance;
(zg) “Prescribed”
means prescribed by rules, circulars, directions, orders or bye-laws.
(zh) “Real
Time Gross Settlement System” means a Payment System which can effect final
settlement of funds, payment obligations and Book Entry Government Securities
and instruments on a continuous basis during such operating hours of a
processing day as the State Bank may determine on a transaction-by-transaction
basis;
(zi) “Service
Provider” includes an operator or any other Electronic Fund Transfer
Service Provider.
(zj) “State
Bank” means the State Bank of Pakistan established under section 3 of the
State Bank of Pakistan Act, 1956 (XXXIII of 1956);
(zk) “Systemic
Risk” means the risk that relates to the inability of a participant to meet
its obligations in the Payment System as they become due or a disruption to the
Payment System that could, for whatever reason, cause other participants in the
Payment System to be unable to meet their obligations as they become due; and
(zl) “Truncated Cheque” means a
cheque which is truncated in a securesystem, during the course of a clearing
cycle, by an Authorized Party, whether paying or receiving payment, immediately
on capture of a scanned image, substituting physical movement of the cheque in
the original form, and includes a cheque in the electronic form.
3. Powers of the State Bank.- (1) The
State Bank may, generally in respect of this Act, or in respect of any
particular provision of this Act, or generally in respect of payment systems,
the conduct of all or any of the Service Providers, Operators of Payment
Systems or issuers of Payment Instruments, issue such rules, guidelines,
circulars, bye-laws, standards or directions as it may consider appropriate.
(2)
The State Bank may, by written notice, require an operator of a Designated
Payment System or issuer of Designated Payment Instrument to make modifications
or alterations to,---
(i)
the Designated Payment System or Designated Payment Instrument including
governance arrangements;
(ii)
operational arrangements;
(iii)
documents and information submitted by operator of a Payment System or issuer
of Payment Instruments;
(iv) any other documents relating to the
Designated Payment System or Designated Payment Instrument.
(3)
In exercising its powers under sub-section (1), the State Bank shall have
regard to,---
(i)
the Systemic Risk;
(ii)
the object of the State Bank to promote monetary stability and a sound
financial structure;
(iii)
the interest of the public including market conditions and behaviour;
(iv)
the safety, integrity, efficiency or reliability of the Designated Payment
System or Designated Payment Instrument including security and operating
standards and infrastructure arrangements;
(v)
the interests of the current Participants of the Designated Payment System or
users of the Designated Payment Instruments; or
(vi)
the interests of persons who, in the future, may want access to the Designated
Payment System or may want to use the
Designated Payment Instrument.
CHAPTER
II
Payment
Systems And Their Operation
4. Designation
of Payment System.- (1) The State Bank may, if it finds it to be necessary
in the public interest, by a written order designate a Payment System as a
Designated Payment System.
(2) The State Bank may, in considering
whether to designate a Payment System as a Designated Payment System, inspect
the premises, equipment, machinery, apparatus, books or other documents, or
accounts and transactions relating to the Payment System.
5. Revocation
of Designation of Payment System.- (1) The State Bank may revoke the
designation of a Designated Payment System if it is satisfied that –
(i)
the Designated Payment System has ceased to operate effectively as a Payment
System;
(ii)
the operator of the designated system has knowingly furnished information or
documents to the State Bank in connection with the designation of the Payment
System which is or are false or misleading in any material particular;
(iii)
the operator or settlement institution of the Designated Payment System is in
the course of being wound up or otherwise dissolved, whether in
(iv)
any of the terms and conditions of the designation or requirements of this Act
has been contravened; or
(v)
the State Bank considers that it is in the public interest to revoke the
designation.
(2)
The State Bank shall not revoke a designation without giving the operator of
the Designated Payment System an opportunity to be heard.
Provided
that the State Bank may, if an immediate systemic risk is involved, suspend the
designation of a Payment System without notice pending the final order.
6. Real
Time Gross Settlement (RTGS) System.- (1) The State Bank may establish and
operate one or more Real Time Gross Settlement Systems for the transfer of
funds and settlement of payment obligations as approved by it.
(2) A settlement system may be linked to another Payment System in
(3) The
State Bank may enter into agreements with participants of a settlement system
and issue to the participants, in writing, rules for the operation of the
settlement system.
(4)
The State Bank may, if it considers it necessary in the interest of the Payment
System, stop or suspend the operation of the Payment System or stop or suspend
the privileges or right of any participant or class of participants;
(5)
Without prejudice to the generality of sub-section (3), the rules provided for
in the said sub-section, may provide-
(i)
for the conduct of participants;
(ii)
for the authentication of transactions carried out electronically;
(iii)
for the appointment of auditors or inspectors for the auditing or inspection of
the operating systems of participants in respect of the settlement system; and
(iv)
for the payment of fees to the State Bank.
7. Requirement
For Retention of Electronic Record.- Financial Institutions or other
Authorized Parties providing funds transfer facility shall be required to
retain complete record of electronic transactions in electronic form in the
same manner as provided in section 6 of the Electronic Transactions Ordinance,
2002 (LI of 2002) for a period as may be determined by the State Bank.
8. Disqualification
of Staff.- (1) No person shall be appointed to serve in any capacity by an
operator of a Designated Payment System if –
(i)
such person has been adjudged a bankrupt, or has suspended payments, or has
compounded a debt with his creditors, whether in or outside
(ii)
such person has been convicted of an offence under this Act or committed any
other offence involving moral turpitude or such an offence has been compounded
against him.
(2)
Any person being the chairman, director, chief executive, by whatever name
called, or official liquidator, or an officer of a designated payment system
mismanages the affairs of the payment system or misuses his position for
gaining direct or indirect benefit for himself or any of his family members or
any other person, shall be disqualified to serve in any capacity in a
designated payment system.
9. Effect of Disqualification.- (1) Where a person
becomes disqualified, as provided for in the foregoing provisions, after his
appointment –
(i)
he shall immediately cease to hold office; and
(ii)
the operator of the Designated Payment System shall immediately terminate his
appointment.
(2)
Any person disqualified under section 8, notwithstanding any contract of
service, shall not be entitled to claim any compensation for his loss of office
or termination of appointment.
10. Governance
Arrangements.- The operator of a Designated Payment System shall establish
adequate governance arrangements which are effective, accountable and transparent
or which may be required by the State Bank to ensure the continued integrity of
such Designated Payment System.
11. Operational Arrangement.- An
Operator of a Designated Payment System shall establish the following
operational arrangements:---
(i)
rules and procedures setting out the rights and liabilities of the operator and
the participant and the financial risks the participants may incur;
(ii)
procedures, controls and measures for the management of credit, liquidity and
settlement risk, including rules determining the time when a payment instruction
and a settlement is final;
(iii)
criteria for participation in the Designated Payment System; and
(iv) measures to ensure the safety, security
and operational reliability of the Designated Payment System including
contingency arrangements.
CHAPTER
III
Payment
Instruments
12. Designation
of Payment Instrument.- (1) Where the State Bank is of the opinion that
(i) a
Payment Instrument is or may be in widespread use as a means of making payment
and may affect the Payment Systems of Pakistan; and
(ii)
it is necessary to protect the interest of the public or it is necessary to
maintain the integrity, efficiency and reliability of a Payment Instrument, the
State Bank may prescribe such Payment Instrument as a Designated Payment
Instrument.
2. Where a Payment Instrument is prescribed
as a Designated Payment Instrument, the issuer of such Designated Payment
Instrument shall comply with the requirements of section 13 within such
period as the State Bank may specify.
13. Issuing
of Designated Payment Instruments.- (1) No person shall be issued a
Designated Payment Instrument unless the issuer has,---
(i)
complied with the requirements of this Act;
(ii)
submitted to the State Bank the documents and information as may be prescribed
thereby;
(iii)
paid the fee Prescribed by the State Bank; and
(iv)
obtained a written approval from the State Bank to issue a Designated Payment
Instrument.
2.
The State Bank may in giving its approval –
(i)
require all or any of the documents submitted to be modified and altered as it
may deem necessary; and
(ii)
impose such restrictions, limitations or conditions as it may deem fit.
(3)
Any Payment Instrument so issued should carry minimum security features to make
its usage secure as per the current international standards.
14. Prohibition
of Issuance of Payment Instruments.- (1) The State Bank may, by a written
order, prohibit any person from issuing or using any Payment Instrument if, in
its opinion,---
(i)
the issuing or use of the Payment Instrument is detrimental to the reliable,
safe, efficient and smooth operation of the Payment Systems of Pakistan or
monetary policy of the State Bank;
(ii)
the prohibition is in the interest of the public; or
(iii)
the Payment Instrument has been issued with an object to entice or defraud the
public.
(iv)
the Person has, in the opinion of the State Bank, failed to comply with the
requirements of this Act.
(2)
The State Bank may, in considering whether to prohibit any Person from issuing
or using any Payment Instrument, inspect the premises, equipment, machinery,
apparatus, books or other documents, or accounts and transactions of the issuer
of the Payment Instrument.
(3)
Any Person causing or attempting to cause obstruction to an officer or
representative of the State Bank in inspection of the premises or equipment
shall, upon complaint made to a court having jurisdiction, be liable to
punishment which may extend to three
years imprisonment of either description or with fine which may
extend to five million rupees or with both.
(4)
The State Bank shall before passing an order under this section, give such
Person a reasonable opportunity to make representation before it.
Provided
that State Bank may, in appropriate cases, without notice direct a Person to
immediately stop issuing a Payment Instrument, pending the final order.
15. Security
- Financial Institutions and other institutions providing Electronic Funds
Transfer facilities shall ensure that secure means are used for transfer,
compliant with current international standards and as may be prescribed by the
State Bank from time to time.
16. Third
Party.- If a person other than a Financial Institution is holding a
Consumer’s Account, the State Bank shall by instructions ensure that the
disclosures, required to be made for Electronic Fund Transfers, and the
protections, responsibilities and remedies created by this Act, are made
applicable to such Persons and services.
17. Payment
by Truncated Cheque.- (1) Notwithstanding anything to the contrary provided
in the Negotiable Instruments Act, 1881 (XXVI of 1881), or any other law, for
the time being in force, Electronic Fund Transfers may be initiated by an
Authorized Party by means of a truncated cheque.
(2)
In case, any transfer of funds takes place in the manner as provided in
sub-section (1), the original cheque shall cease to be negotiable.
(3)
Validity of a cheque shall not be affected if for any technical reason or
otherwise, transfer of funds as provided in sub-section (1) fails to take
effect.
(4)
If transfer of funds does not take effect as provided in sub-section (3), the
Bank or the Authorized Financial Institution concerned may require physical
delivery of the cheque from the originator.
CHAPTER
IV
Clearing
and Other Obligations
18. Clearing
Houses, Audit and Inspection.- (1) The State Bank may nominate one or more
Clearing Houses to provide clearing or settlement services for a Payment System
on such terms and conditions as may be determined by it.
(2) The State Bank may, for the purposes of
carrying out its functions under this Act, conduct audits and inspections of
Clearing Houses, and the Clearing House shall, as required, assist the State
Bank to the extent necessary to enable it to carry out an audit or inspection.
(3) Auditors for carrying out the purposes
provided for in sub-section (1) shall be appointed with prior approval in
writing of the State Bank.
19. Notice
Required of Significant Changes.- Every Clearing House shall, in respect of
its Designated Payment System, provide the State Bank with reasonable notice of
not less than fifteen Business Days in advance of any change to be made by the
Clearing House that is of a significant nature in relation to the Designated
Payment System and, without limiting the generality of the foregoing, the
notice shall be provided in respect of any change affecting,---
(a)
the legal documents and bye-laws of the Clearing House;
(b)
the operation of the Designated Payment System;
(c)
the bye-laws, agreements, rules, procedures, guides or other documentation
governing the Designated Payment System;
(d)
the composition of a board of directors of the Clearing House due to
resignation or otherwise; or
(e)
the appointed auditor of the Clearing House.
20. Participants
Responsible Where Clearing House Fails to Comply, etc. .- Where a Clearing
House fails to comply with the obligations imposed on it under this Act in
respect of its Payment System or otherwise contravenes the provisions of this
Act, the Participants jointly and severally shall comply with those obligations
in the same manner and to the same extent as if the participants were the
Clearing House on which the obligations are imposed or they committed the
contravention.
21. Settlement
Provisions.- (1) Notwithstanding anything to the contrary provided in this
Act or any other law for the time being in force, the settlement rules of a
Designated Payment System shall be valid and binding on the operator and the
participants and any action may be taken or payment made in accordance with the
settlement rules.
(2)
Where the settlement rules of a Designated Payment System provide that the
settlement of a payment obligation through an entry to or a payment out of an
Account of a Participant or a Clearing House at the State Bank is final and
irrevocable the entry or payment shall not be required to be reversed, repaid
or set aside.
22. Rights,
etc., Not Subject to Stay .- (1) The rights and remedies of a participant,
a Clearing House, or the State Bank in respect of collateral granted to it as
security for a payment or the performance of an obligation incurred in a
Designated Payment System may not be the subject of any stay to be granted by
any court or order affecting the ability of creditors to exercise rights and
remedies with respect to the collateral.
23. Settlement Rules .- (1) The State Bank may make
“settlement rules” to provide the basis on which payment obligations are
calculated, netted or settled including rules for the taking of action in the
event that a participant is unable or likely to become unable to meet its
obligations to the Clearing House, or to the other participants.
(2)
Every participant and Clearing House shall, in respect of its Designated
Payment System, provide the State Bank with such information, at such times and
in such form as the State Bank may require in writing.
24. Electronic
Money Institution.- (1) An applicant that wants to become an Electronic
Money Institution shall submit an application to the State Bank for issue of a
license to perform Electronic Money activity.
(2)
An Electronic Money Institution may perform only such activities as are
specified in its license;
25. Preservation
of Rights, etc. .- (1) Except to the extent expressly provided, this Act
shall not operate to limit, restrict or otherwise affect -
(i)
any right, title, interest, privilege, obligation or liability of a person
resulting from any transaction in respect of a transfer order which has been
entered into a Designated Payment System; or
(ii)
any investigation, legal proceeding or remedy in respect of any such right,
title, interest, privilege, obligation or liability.
(2)
Nothing in this Act shall be construed to require.
(i)
the unwinding of any Netting done by the operator of a Designated Payment
System, whether pursuant to its default arrangements or otherwise;
(ii)
the revocation of any transfer order given by a participant which is entered
into a Designated Payment System; or
(iii)
the reversal of a payment or settlement made under the rules of a Designated
Payment System.
CHAPTER
V
Supervisory
Control of the State Bank
26. Issuance of Model Clauses.- The
State Bank may issue model clauses for use by the Financial Institutions and
Authorized Parties to facilitate compliance with the disclosure requirements as
specified in section 29 and to aid consumers in understanding the rights and
responsibilities of participants in Electronic Fund Transfers
by utilizing readily understandable language.
27. Modification
of Requirements.- Instructions issued by the State Bank may provide for
such adjustments and exceptions for any class of Electronic Fund Transfers, as
in the opinion of the State Bank are necessary or proper for the purposes of
this Act, to prevent circumvention or evasion thereof, to facilitate compliance
therewith and to alleviate any undue compliance burden on small Financial
Institutions.
28. Service
Providers Other Than Financial Institutions.- The State Bank shall
determine, which provisions of this Act, subject to any modifications,
adjustments or exceptions as provided for in section 26, shall apply to a
person other than a Financial Institution, holding a Consumer’s Account.
29. Requirement
of Notice.- (1) The instructions issued by the State Bank under section 3
shall require any ATM Operator or any other Service Provider who imposes a fee
on any consumer for providing services to such consumer, to provide notice in
accordance with sub-sections (2) and (3) to the consumer of the fact that –
(i) a
fee is imposed by such operator or Service Provider for providing the service;
and
(ii)
the amount of any such fee.
(2)
The notice required by sub-section (1) with respect to any fee shall be posted
at a prominent and conspicuous location on or at the ATM or other Electronic
Terminal at which the consumer initiates the Electronic Fund Transfer.
(3)
The notice required under sub-section (1) with respect to charging of fee shall
appear on the conspicuous part of the ATM or Electronic Terminal in the manner
as may be determined and notified by the State Bank in this behalf.
(4) No fee may be imposed by any ATM
Operator or other Service Provider, as the case may be, in connection with any
Electronic Fund Transfer initiated by a consumer for which a notice is required
under sub-section (1), unless the consumer receives such notice in accordance
with sub-sections (2) and (3) and such consumer elects to continue in the
manner necessary to effect the transaction after receiving such notice.
30. Terms
and Conditions of Transfers.- (1) The terms and conditions of Electronic
Fund Transfers involving a Consumer’s Account shall be disclosed by a Financial
Institution, operator or other Authorized Party in English and in a manner clearly
understood by the consumer, at the time the Consumer contracts for an
Electronic Fund Transfer service, in accordance with the instructions of the
State Bank.
(2) Such disclosures may include the following, namely:-
(i)
the Consumer’s liability for unauthorized Electronic Fund Transfers and, at the
option of the Financial Institution or Authorized Party or Operator, notice of
the advisability of prompt reporting of any loss, theft, or unauthorized use of
a Card, Access Code or other means of access;
(ii)
the telephone number and address of the Person or office to be notified in the
event the Consumer believes that an unauthorized Electronic Fund Transfer has
been or may be effected;
(iii)
the kind and nature of Electronic Fund Transfers which the Consumer may
initiate, including any limitations on the frequency or amount of such
transfers;
(iv)
any charges for Electronic Fund Transfers or for the right to make such
transfers;
(v)
the Consumer’s right to stop payment of a Preauthorized Electronic Fund
Transfer and the procedure to initiate such a stop payment order;
(vi)
the Consumer’s right to receive information of Electronic Fund Transfers under
section 29;
(vii)
a summary, in a form Prescribed by the State Bank, of the error resolution
provisions of section 36 which, the Financial Institutions, Authorized Parties
or Operators shall be required to transmit at least once per calendar year;
(viii)
the Financial Institution’s, Authorized Party’s or Operator’s liability to the
Consumer;
(ix)
the circumstances under which the Financial Institution, Authorized Party or
Operator will in the ordinary course of business disclose information
concerning the Consumer’s Account to third Persons; and
(x) a
notice to the Consumer that a fee may be imposed by an ATM Operator or Service
Provider, if the Consumer initiates a transfer from an ATM or other Electronic
Terminal that is not operated by the Person or the Financial Institution
issuing the Card or other means of access.
31. Notification
of Changes.- (1) A Financial Institution or any other Authorized party,
shall notify a Consumer in writing or such other means as may be
prescribed by the State Bank from time to time, at least
twenty-one days prior to the effective date of any material change in any term
or condition of the Consumer’s Account required to be disclosed under
sub-section (1) of section 29, unless such change is immediately necessary to
maintain or restore the security of an Electronic Fund Transfer system or a
Consumer’s Account.
(2)
Financial Institution shall be required to make a subsequent notification,
provided for in sub-section (1), if such a change is made permanent.
CHAPTER
VI
Documentation
of Transfers
32. Availability
of Documentation and Proof.- For each Electronic Fund Transfer initiated by
a Consumer from an Electronic Terminal, the Financial Institution holding such
Consumer’s Account shall, directly or indirectly, at the time the transfer is
initiated, make available to the Consumer documentation and proof of such
transfer, clearly setting forth, as may be required by such transaction, the
following particulars, namely –
(i)
the amount involved and the date on which the transfer is initiated;
(ii)
the type of transfer;
(iii)
the identity of the Consumer’s Account with the Financial Institution from
which or to which funds are transferred;
(iv)
the identity of any third party to whom or from whom funds are transferred;
(v)
the location or identification of the Electronic Terminal involved; and
(vi) name of the Accountholder from or to
which funds are transferred.
33. Periodic
Statement.- (1) A Financial Institution shall provide each consumer with a
periodic statement for each account of such consumer that may be accessed electronically.
(2)
Such statement shall be provided at least once every month, or as required by
the consumer, or such other period as the State Bank may determine from time to
time.
(3)
Such statement shall include all the necessary particulars in respect of the
Consumer’s Account and shall clearly set forth the balances in Consumer’s
Account at the beginning and the close of the period, the amount of any fee or
charge assessed by the Financial Institution during the period, for whatever
purpose and the address and telephone number to be used by the Financial
Institution for the
purpose of receiving any enquiry or notice of account error from
the Consumer.
34. Documentation
as Evidence.- In any action involving a Consumer or any Participant, any
documentation required by either section 31 or 32 of this Act to be given to
the Consumer, which indicates that an Electronic Fund Transfer was made to
another Person, shall be admissible as evidence of such transfer and shall
constitute prima facie proof that such transfer was made.
35. Preauthorized Transfers.- (1) A
preauthorized Electronic Fund Transfer from a Consumer’s Account may be
authorized by the Consumer either in writing, or in any other accepted form.
(2) A consumer may stop payment of a
Preauthorized Electronic Fund Transfer by notifying the Financial Institution.
CHAPTER
VII
Notification
of Error
36. Notification
of error.- (1) In this section, the following shall be construed as error,
namely –
(i)
an unauthorized Electronic Fund Transfer;
(ii)
an incorrect Electronic Fund Transfer to or from the Consumer’s Account.
(iii)
the omission of an Electronic Fund Transfer from a periodic statement;
(iv)
a computational or book keeping error made by the Financial Institution
relating to an Electronic Fund Transfer;
(v)
the Consumer’s receipt of an incorrect amount of money from an Electronic
Terminal; or
(vi)
any other error as determined by the State Bank.
(2)
When an error has occurred, the Financial Institution or the Authorized Party
shall investigate the alleged error to determine whether an error has occurred,
and report in writing the result of such investigation to the consumer within
ten Business Days.
(3)
The Financial Institution may require written confirmation to be provided to it
within ten Business Days of an oral notification of error.
(4) A Financial Institution or Authorized
Party shall not be liable to credit a Consumer’s Account in accordance with the
provisions of section
37. Correcting
Error.- If the Financial Institution or Authorized Party determines that an
error did occur, it shall promptly, and in no event later than one Business Day
after such determination, correct the error, including the crediting of a
Consumer’s Account with mark up where applicable:
Provided
that such investigation shall be concluded not later than ten Business Days
after receipt of notice of the error
38. Absence
of Error.- If the Financial Institution or the Authorized Party determines
after its investigation that an error did not occur, it shall deliver or mail
to the consumer an explanation of its findings within three Business Days after
the conclusion of its investigation, and upon request of the consumer promptly
deliver or mail to the consumer copies of all documents which the Financial
Institution or the Authorized Party relied on to conclude that such error did
not occur.
39. Triple Damages.- (1) If in any
case filed under section 50 of this Act, the court finds that a Financial
Institution and/or an Authorized Party is guilty of the commission of any act,
provided for in sub-section (2) or (3) of this section, the Financial
Institution, shall in addition to costs incurred by the consumer, be further
liable to pay to the Consumer, triple damages determined under section 50.
(2)
The Financial Institution or the Authorized Party shall be liable to pay
damages, provided for in sub-section (1), if it did not re-credit a Consumer’s
Account within the ten days period specified in section 37 and the Financial
Institution and/ or the Authorized Party did not make a good faith
investigation of the alleged error or it did not have reasonable basis for
believing that the Consumer’s Account was not in error.
(3) The Financial Institution or the
Authorized Party shall also be liable to pay damages, provided in sub-section
(1), if it knowingly and willfully concluded that the Consumer’s Account was
not in error when such conclusion could not reasonably have been drawn from the
evidence available to the Financial Institution or the Authorized Party at the
time of its investigation.
CHAPTER
VIII
Liability
of Parties
40. Consumer’s Liability.- A consumer
shall be liable for any unauthorized Electronic Fund Transfer involving the
Account of such consumer only if the card or other means of access utilized for
such transfer was an Accepted Card or other means of access and if the issuer
of such card, code or other means of access has provided a means whereby the
user of such card, code or other means of access can be identified as the
person authorized to use it, such as by signature, photograph, or finger print
or by electronic or mechanical confirmation.
41. Burden
of Proof.- In any action which involves a consumer’s liability for an
unauthorized Electronic Fund Transfer, the burden of proof shall be upon the
Financial Institution or the Authorized Party to show that the Electronic Fund
Transfer was authorized or, if the Electronic Fund Transfer was authorized,
then the burden of proof shall be upon the Financial Institution or the
Authorized Party to establish that the conditions of liability set forth in
this Act were met, and the disclosures required to be made to the consumer under
this Act were in fact made in accordance with the provision thereof.
42. Liability
in Case of Extension of Credit.- In the event of transaction which involves
both an unauthorized Electronic Fund Transfer and an extension of credit limit
pursuant to an agreement between the consumer and the Financial Institution or
the Authorized Party, nothing shall impose liability upon a consumer for an
unauthorized Electronic Fund Transfer in excess of his liability for such
transfer under any other applicable law or under any agreement with the
Consumer’s Financial Institution or Authorized Party.
43. Liability
of Financial Institutions/ Authorized Parties.- Subject to what is provided
in this section or section
(i)
the Financial Institution’s or Authorized Party’s failure to make an Electronic
Fund Transfer, in accordance with the terms and conditions of an Account, in
the correct amount or in a timely manner when properly instructed to do so by
the consumer, except where,---
(a)
the Consumer’s Account has insufficient funds;
(b)
the funds are subject to legal process or other encumbrance restricting such
transfer;
(c)
such transfer would exceed an established credit limit;
(d)
as otherwise provided in instructions by the State Bank.
(ii) the Financial Institution’s or
Authorized Party’s failure to make an Electronic Fund Transfer due to
insufficient funds when the Financial Institution or Authorized Party failed to
credit, in accordance with the terms and conditions of an Account, a deposit of
funds to the Consumer’s Account which would have provided sufficient funds to
make the transfer, and (iii) the Financial Institution’s or
Authorized Party’s failure to stop payment of Preauthorized transfer from a
Consumer’s Account when instructed to do so in accordance with the terms and
conditions of Account.
44. Force
Majeure.- A Financial Institution, an Authorized Party, Operator or a
Participant shall not be liable under clauses (i) and (ii) of section 43 if it
shows by a preponderance of evidence that its action or failure to act resulted
from,---
(i)
force majeure or other circumstance beyond its control, that it exercised
reasonable care to prevent such an occurrence, and that it exercised such
diligence as the circumstances required;
(ii)
a technical malfunction which was known to the Consumer at the time he
attempted to initiate an Electronic Fund Transfer or, in case of Preauthorized
transfer, at the time such transfer should have occurred
45. Intent.-
In case of failure described in clauses (i) and (ii) of section 43 was not
intentional and it resulted from a bona fide error, notwithstanding the
maintenance of procedures reasonably adopted to avoid any such error, the
Financial Institution, Authorized Party, operator or the participant shall be
liable for actual damages proved.
46. Prohibition
on Improper Issuance.- No person may issue to a Consumer any Card, code or
other means of access to such Consumer’s Account for the purpose of initiating
an Electronic Funds Transfer other than in response to a request or application
therefor; or as a renewal of, or in substitution for, an Accepted Card, code or
other means of access, whether issued by the initial issuer or a successor.
47. Exceptions.-
(1) Notwithstanding the provisions of section
(i)
such card, code or other means of access is not validated;
(ii)
such distribution is accompanied by a complete disclosure, in accordance with
section 29 of the Consumers’ rights and liabilities which will apply if such
Card, code or other means of access is validated;
(iii)
such distribution is accompanied by a clear explanation, in accordance with
instructions of the State Bank, that such card, code, or other means of access
is not validated and how the Consumer may dispose of such code, card, or other
means of access if validation is not desired and such Card, code, or other
means of access is validated only in response to a request or application from the
Consumer, upon verification of the Consumer’s identity.
(2)
For the purpose of this section, a card, code, or other means of access is
validated when it may be used to initiate an Electronic Fund Transfer.
48. Suspension
of Obligation - If a technical malfunction prevents the effectuation of an
Electronic Fund Transfer initiated by a consumer to another person, and such
other person has agreed to accept payment by such means, the Consumer’s
obligation to the other person shall be suspended until the malfunction is
corrected and the Electronic Fund Transfer may be completed, unless such other
Person has subsequently, by written request, demanded payment by means other
than an Electronic Fund Transfer.
49. Waiver
of Rights.- No writing or other agreement between a Consumer and any other
Person may contain any provision which constitutes a waiver of any right
conferred or cause of action created by this Act, and any such writing waiving
any right or cause of action shall be void and of no legal effect.
CHAPTER
IX
Action
Before the Court
50. Damages.-
Except as otherwise provided by this section or the provisions of this Act, any
person who fails to comply with any provision of this Act with respect to any
other person, except for an error resolved in accordance with the provisions of
this Act, shall, upon an action brought before a court, be liable to such
person for payment of an amount equal to the sum of any actual damage sustained
by that person as a result of such failure.
51. Bonafide
Error. - Except as provided by section
52. Actions
Taken in Good Faith.- (1) The provisions of section 50 shall not apply to
any act done or omitted in good faith, or purported to be done in conformity
with any rule, instruction or interpretation of approval by an official of the
State Bank duly authorized to issue such interpretations or approvals under
such procedure of the State Bank as may be prescribed for.
(2) A Financial Institution or an Authorized
Party shall not incur any liability under section 50 on account of any failure
to make a disclosure in proper form, if such institution utilized an
appropriate model clause issued by the State Bank, notwithstanding the fact
that after such act, omission, or failure has occurred, such rule, instruction,
approval or model clause under sub-section (1) was amended,
rescinded or determined by judicial or other authority as invalid for any
reason.
53. Notification
to Consumer Prior to Action.- A person shall not incur any liability for
any failure to comply with any requirement under this Act, if prior to the
institution of an action under this Act, such person notifies the consumer
concerned of the failure, complies with the requirements of this Act and makes
an appropriate adjustment to the Consumer’s account and pays actual damages or,
where applicable, damages in accordance with section 39.
54. Action
in Bad Faith.- On finding by the court that an unsuccessful action for any
alleged failure was brought in bad faith or for the purposes of harassment, the
court may award to the defendant(s) costs of such litigation and the attorney’s
fees found reasonable in relation to the work.
55. Jurisdiction
of Courts.- (1) With regard to the amount in controversy, any civil action
under this Act may be brought in any court of competent jurisdiction.
(2)
The court exercising jurisdiction shall not adjourn the case for more than ten
days at a time; provided that the aggregate of adjournments granted to the
defendant shall not exceed three.
(3)
The court shall announce its judgment within ninety days after notice upon the
defendant in the case was first served.
56. Criminal
Liability.- Whoever knowingly and willfully gives false information or
inaccurate information or fails to provide information which he is required to
disclose by this Act or any instruction issued thereunder, or otherwise fails
to comply with any provision of this Act shall be punished with imprisonment of
either description which may extend to three years, or with fine which may
extend to three million rupees, or with both.
57. Violations Affecting Electronic
Commerce.- Whoever,---
(1)
knowingly, in a transaction effected by electronic commerce, uses or attempts
or conspires to use any counterfeit, fictitious, altered, forged, lost, stolen,
or fraudulently obtained Debit Instrument to obtain money, goods, services or
anything else of value aggregating five thousand rupees or more, or
(2)
knowingly receives, conceals, uses or transports money, goods, services or
anything else of value aggregating five thousand rupees or more obtained by use
of any counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently
obtained Debit Instrument, or
(3) knowingly receives, conceals, uses,
sells, or transports one or more tickets for transportation, and which have
been purchased or obtained with one or more counterfeit, fictitious, altered,
forged, lost, stolen or fraudulently obtained Debit Instrument, shall
be punished with imprisonment of either description for a term which may extend
to seven years, or with fine which may extend to one million rupees, or with
both.
Explanation.-For the purpose of this section e-commerce
means the activity of buying, selling or contracting for goods, services and
making payments using internet or worldwide web through communication networks
including of wireless networks, within or outside
58. Cheating by Use of Electronic Device.-
Whosoever cheats by pretending to be some other person, or by knowingly
substituting one person for another, or representing that he or any other
person is a person other than he or such other person really is, or by cheating
by impersonation, fraudulently or dishonestly uses any credit or debit card, or
code or any other means of access to an Electronic Fund Transfer device, and
thereby causes any wrongful gain to himself or any wrongful loss to any other
person, shall be punished with imprisonment of either description for a term
which may extend to seven years, or with fine which shall not be less than the
wrongful loss caused to any person, or with both.
CHAPTER
X
Miscellaneous
59. Act
to override Law of Insolvency: (1) Notwithstanding anything to the contrary
provided in the law of insolvency, rights and liabilities of persons arising
from transfer orders in this Act shall be governed subject to the provisions of
this section, in case such person is a participant.
(2)
No transfer order passed under this Act, any disposition of property in
pursuance of such order, or the default arrangements of a designated system
shall be regarded to any extent as invalid on the ground of inconsistency with
the law of insolvency.
(3)
No order of the court or any office holder acting under the law of insolvency
shall interfere with settlement of a transfer order passed in accordance with
the rules of the designated system.
(4) A
debt or other liability arising out of a transfer order which is the subject of
action taken under default arrangements, may not be proved in a bankruptcy or
winding up proceedings, or may not be taken into account for the purpose of any
set-off until the completion of the action taken under default arrangements.
(5) The Netting arrangement shall be valid
and enforceable and an operator or participant of a designated system shall be
required to give effect to such arrangement.
(6)
Nothing in this section shall be construed to require the unwinding of any
netting or gross payment done by the operator of a Designated Payment System,
whether pursuant to its default arrangements or otherwise:
Provided that this section shall not apply
in relation to any transfer order which is entered into a Designated Payment
System after the expiry of the day on which a court made an order for
insolvency, judicial management or winding up in respect of the participant, or
after a resolution for voluntary winding up of the participant was passed.
Explanation.- In this section “Default Arrangements” means
the arrangements put in place by a designated system to limit systemic and
other kinds of risks which arise in the event of a participant appearing to be
unable, or likely to become unable, to meet its obligations in respect of a
transfer order, including any arrangements for netting.
60. Operator
of Designated Payment System Insolvent: (1) Where the State Bank is
satisfied that any operator of a Designated Payment System is insolvent or
likely to become insolvent, or has become or likely to become unable to meet
all or any of his obligations, or has suspended payments or compounded with his
creditors, or where it is in the public interest, State Bank may:
(i)
assume control of the whole of the property, business and affairs of the
operator of the Designated Payment System and carry on the whole of his
business and affairs and appoint its own officers, or assume control of such
part of its property, business and affairs and carry on such part of its
business and affairs as the State Bank may determine, and it may further order
that the cost and expenses of the State Bank or the remuneration of any Person
so appointed by the State Bank, may be paid out of the funds and properties of
the operator of the Designated Payment System which shall be regarded as the
first charge thereon; and
(ii)
take any action or initiate any proceedings against the operator under the law
of insolvency, whether or not an order has been made under the preceding
sub-section
(2)
No order under this section shall be made unless the operator of a Designated
Payment System or any director or officer of the operator of the Designated
Payment System in respect of which an order is to be made, or who in pursuance
of such order is to be removed from office, has been given a reasonable opportunity
of making representation against the proposed order.
Provided that State Bank may, if an
immediate systemic risk is involved, take immediate action under this section
pending the final order.
61. Application
of Fine.- A court imposing any fine under this Act may direct that the
whole or any part thereof shall be applied towards compensation to the
aggrieved person for any loss caused by the person committing an offence under
this Act.
62. Power
to Investigate.- (1) Notwithstanding anything to the contrary provided by
any other law for the time being in force, any information relating to
commission of an offence under this Act shall be recorded in writing by an
officer-in-charge of a police station, generally empowered in this behalf under
the Code of Criminal Procedure, 1898 (Act V of 1898).
(2)
Investigation of offences committed under this Act shall be carried out by an
officer-in-charge of the police station empowered under the Code of Criminal
Procedure, 1898 (Act V of 1898) to exercise such powers, including power to
examine witnesses, to arrest any person or to seize any document or thing or
search any place, and do all other acts or things necessary for such purpose;
Provided
that such officer shall be subject to the same restrictions in respect of any
document or record of a financial or Electronic Money Institution as is
provided in respect of documents in custody of a Bank or a banker in section 94
of the Code of Criminal Procedure 1898 (Act V of 1898).
63. Trial
of Offence.- (1) Notwithstanding anything to the contrary provided by any
other law for the time being in force, offences provided for in Chapter IX of
this Act shall be tried by the Court of Sessions, having territorial
jurisdiction in the case, which shall observe the same procedure as provided
for trial of offences by the Code of Criminal Procedure,1898 (Act V of 1898).
(2)
Cognizance shall be taken by the court upon a report of facts made in writing
by a police officer or upon receiving a complaint of facts which constitute the
offence.
(3)
In case of a complaint, the court may postpone the issue of process for
attendance of the person complained against and refer the complaint to the
officer-in-charge of a police station for investigation and report.
64. Application
to acts done outside Pakistan.- The provisions of this Act shall apply notwithstanding
the matters being the subject hereof occurring outside Pakistan, in so far as
they are directly or indirectly connected to, or have an effect on or bearing
in relation to persons, Payment Systems or events within the territorial
jurisdiction of Pakistan.
65. Offences to be non-cognizable etc. –
Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act
V of 1898), all offences under this Act are bailable, non-cognizable and
compoundable with the permission of the court.
66. Procedure.-
(1) Notwithstanding anything to the contrary provided in this Act or any other
law for the time being in force, no Court or authority or officer shall take
cognizance of any offence against this Act which is alleged to have been
committed by any person, party, participant, Service Provider, operator or
Financial Institution or any officer or auditor thereof, who is authorized,
licensed or designated under the Act, except on the complaint in writing of the
State Bank:
Provided
that nothing in this sub-section shall apply to a prosecution by a person,
party, participant, Service Provider, operator or Financial Institution or any
of its officers or employees:
Provided
further that, where the State Bank is itself empowered to impose a penalty or
fine, it may take cognizance of the offence and start proceedings on the basis
of a memorandum of allegations placed on record by an officer of State Bank
(2)
Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act
V of 1898), the personal attendance of the complainant before the Court or
authority trying the offence shall not be necessary unless the Court, for
reasons to be recorded, requires his personal attendance at the trial.
67. Overriding
Effect.- This Act shall have effect notwithstanding anything to the
contrary provided in any other law for the time being in force or any
agreement, contract, memorandum or articles of association.
68. Removal
of Difficulties.- If any difficulty arises in giving effect to any
provision of this Act, the Federal Government may, in consultation with the
State Bank, make such order as appears to it to be necessary for the purpose of
removing the difficulty.
69. Power
to Call For Information.- (1) The State Bank may direct any Financial Institution
or Service Provider or any other Authorized Party to give or furnish to the
State Bank, within such time as the State Bank may specify in this behalf, such
information, documents or records in respect of any business carried on by such
institution or Service Provider or other Authorized Party, as may be within its
knowledge or under its possession, custody or control.
(2)
If such institution or Service Provider or other Authorized party fails or
omits to furnish any information required by the State Bank under sub-section
(1) or willfully makes a statement which is false in any material particular it
shall be liable to get its license under section 24 withdrawn by the State Bank
and to pay it fine which may extend to one million rupees.
(3) Any party or person aggrieved by an order passed under
sub-section (2) may appeal within fifteen days of such order to the Governor of
the State Bank, who shall dispose of the appeal within sixty days.
70. Secrecy
and Privacy.- (1) A Financial Institution or any other Authorized party
shall, except as otherwise required by law, not divulge any information
relating to an Electronic Fund Transfer, affairs or account of its consumer,
except in circumstances in which, according to the practice and usage customary
among bankers, it is necessary or appropriate for a Financial Institution to
divulge such information, or the consumer has given consent therefor.
(2)
No person other than an officer or agent appointed by the Financial Institution
that maintains the account of a consumer may have access through an Electronic
Terminal to information relating to Electronic Fund Transfer, the affairs, or
the account of the consumer.
(3)
The rules governing the operation of individual accounts will be
applicable
to Electronic Fund Transfers in relation to disclosure of information to third
parties.
71. Complaint
Resolution.- (1) A consumer, not satisfied with the outcome of a complaint
made to a Financial Institution in relation to any Electronic Fund Transfer or
disclosure made by a Financial Institution to a third party, without prejudice
to any right to seek any other remedy under the law, may make a complaint to
the State Bank.
(2)
The State Bank after hearing the parties may pass such order as it deems fit
under the circumstances of the case.
72. Suspension
of Operation.- (1) The Federal Government in consultation with the State
Bank may by a general order, for the time being suspend operation of any
provision of this Act, and from the date of such order, such provision shall
cease to apply.
(2)
When the order made under sub-section (1) is withdrawn by the Federal
Government
such suspension shall cease to operate with effect from the date specified by
the Federal Government in this behalf.
73. Immunity
of the State Bank and its Employees, etc. .- (1) No suit or other legal
proceedings shall lie against the State Bank or any officer or employee thereof
or any person acting under its direction:
(i)
for any act done in good faith,-
(a)
in the performance, or intended performance, of any function or duty; or
(b) in the exercise, or intended exercise, of any power, in the
capacity of the State Bank as the designated Bank under this Act; or
(ii)
for any neglect or default in the performance or exercise in good faith of such
function, duty or power.
74. Penalties.-
(1) Any financial Institution or Service Provider, who willfully fails to
comply with any provision of this Act or rules, circulars, directions, orders
or bye-laws issued under this Act or any provision thereof, shall be liable to
pay fine to the State Bank which may extend to one million rupees.
(2)
In case of failure to pay the fine, State Bank may suspend or revoke the
license of the Service Provider or Financial Institution concerned, as the case
may be.
(3) If any amount of fine under
sub-section (1) remains unpaid, it may be recovered as arrears of land
revenue.”
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