Home » RBI cautions Public against using car pooling app sRide

Reserve Bank of India has alerted citizens that a car-pooling application by the name ‘sRide’ is being run without the required permissions.
In a press release, the RBI said, the Gurgaon-based sRide Tech Private Limited is operating a semi-closed wallet without obtaining the requisite authorisation under the provisions of the Payment and Settlement Systems Act, 2007.
As such, any person dealing with sRide Tech Private Limited will be doing so at their own risk.
Cautioning people using such apps, the RBI has urged citizens to verify the list of authorized payment system providers from the RBI’s website before parting with their money.

What is car pooling :

It facilitates the use of the full seating capacity of a car/vehicle.
Carpooling also known as car-sharing, ride sharing or lift-sharing is a simple process of sharing one’s car with people traveling on the same route.
This helps reduce traffic and carbon emissions by decreasing the number of vehicles on the road.

Popular carpooling apps in india:

The relevant regulation in India is the Motor Vehicles Act, 1988 (MVA). The MVA does not include provisions disallowing carpooling.
Therefore, private car owners do not require a permit for carpooling in India(as long as the private car owner does not operate for ‘hire or reward’).

Is sRide legal in India?

Carpooling apps such as Quick Ride and sRide are widely used by IT employees in Bengaluru. But they operate without the sanction of the lawthat requires clear demarcation of transport and non-transport vehicles.

Benefits of Carpooling in India

Through carpooling, you tend to save the money that you were supposed to spend on fuel and parking. Also, the more there would be occupants in the car, the more you would save as you would have to give less amount. Besides this, you will keep the money that you provide at toll tax.

With the reduced number of cars, the use of the fuel will also decrease, which will improve the quality of the air, which will further contribute to a clean environment. It will also reduce noise pollution significantly.

You would not have to drive the car so you can relax in the car and prevent health problems like backache and others. Also, there would be less air pollution and reduction in cardiovascular diseases, respiratory diseases, and allergies, and carpooling is way less stressful than driving.

Through carpooling, you will get different options to commute, which you will not get through other modes of transportation. This service is bliss for people who have negligible access to other methods.

While commuting with the same set of people regularly, you will tend to bond with them, and thus, you will end up making friends.

The Payment and Settlement Act System, 2007 (PSS Act, 2007) was set up by the Reserve Bank of India (RBI) which received the assent of the President on 20th December 2007.
It came into force from 12th August 2008.
The Act empowers RBI (apex institution) to deal with the matters relating to that purpose and other purposes for which RBI is authorized to constitute a central authority known as the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS).

The objectives of The Payment and Settlement Systems Act, 2007 are:

To provide regulation and supervision of payment methods in India.
To designate RBI, the apex institution as authority for purposes related to payment systems in India.
To constitute such regularities by RBI to exercise its power and perform its functions.
To provide a legal basis for “netting” and “settlement finality”.

According to Section 4 of the PSS Act, only RBI has an authority to operate or commence any payment system and if any person or system providers desire to operate or commence a payment system then he has to apply for authorization from RBI under Section 5 of the Act.
The application of authorization shall be made according to Form A under Regulation 3(2) under PSS Regulations, 2008.
The application should be filled and submitted along with the required documents and fee of 10,000/- to the RBI. The application fee can be submitted in cash, cheque, demand draft, payment order, or electronic fund transfer in favour of RBI.
It can also be submitted through electronic mode.
The system providers operating the payment systems or desires to set up such a payment system need to get authority from the RBI from this link. Any unauthorized operation through a payment system would be considered as an offence under this Act and would be liable for punishment.

Section 26, 27, 28, 29, 30, and 31 deals with the provisions related to offences and penalties.
Offences under the Act include the unauthorized operation of a payment system, failure to comply with the terms of authorization, failure to produce statements, return information, or documents providing false information, disclosure of prohibited information, violating the provisions of the Act, not acting in compliance of the directions given by the RBI.
For committing any of the offences, RBI is empowered to initiate a criminal proceeding against the offender. RBI can even impose fines on the person for contravening certain provisions of the Act.

RBI cautions Public against using car pooling app sRide