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RBI to introduce new prepaid payment instrument for digital transactions up to Rs 10,000

RBI proposed to introduce a new type of prepaid payment instruments (PPIs) which can be used only for the purchase of goods and services up to a limit of Rs 10,000. You can load/re-load such PPI only from a bank account to pay your bills.

, ET Online|
Updated: Dec 06, 2019, 12.26 PM IST
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The loading /reloading of such PPI will be only from a bank account only.
The Reserve Bank of India (RBI), in its Statement on Development and Regulatory Policies, has proposed to introduce a new type of prepaid payment instrument (PPI) with a limit of up to Rs 10,000.

As per the policy statement, RBI said, "Prepaid Payment Instruments (PPIs) have been playing an important role in promoting digital payments. To further facilitate its usage, it is proposed to introduce a new type of PPI which can be used only for purchase of goods and services up to a limit of Rs 10,000. The loading /reloading of such PPI will be only from a bank account and used for making only digital payments such as bill payments, merchant payments, etc. Such PPIs can be issued on the basis of essential minimum details sourced from the customer."

Abhijeet, CEO and co-founder, 1Pay, "The RBI mandate on PPIs is a move in the right direction especially given the current full KYC norms prescribed for PPIs was proving to be a serious impediment for their growth. Since money can be loaded only through fully KYC compliant bank account and there is also a full l trail for its end use, the minimum KYC norm prescribed will enable instant issuance, faster recharge and quick transactional processes. "This ease of business for both consumers and merchants will certainly provide a further boost to small ticket digital payments such as tolls and promote newer use cases for digital payments," he said.

What are prepaid payment instruments?
A PPI can be used to buy goods and services as well as transferring/sending money to a friend, family, etc. Some of the prominent PPIs include Paytm, Mobikwik (semi-closed system PPIs), Gift card (closed system PPIs), Travel/Debit/credit cards (open system PPIs).

Few months ago, in August 2019, The RBI had notified that the extension in timeline for conversion of minimum KYC detail for prepaid payment instruments (PPIs) to full KYC compliant PPIs. The timeline had been extended from 18 months to 24 months. The notification said that this timeline will not be extended any further.

The RBI rules for such PPIs state that:
1. Bank and non-banks are permitted to issue semi closed PPIs for up to Rs 10,000 after obtaining minimum details of the PPI holder.

2. The minimum details shall include mobile number verified with One Time Pin (OTP) and self-declaration of name and unique identification number of any of the ‘officially valid document’ defined under Rule 2(d) of the PML Rules 2005, as amended from time to time.

3. These PPIs shall be reloadable in nature and issued only in electronic form, including cards.

4. The amount loaded in such PPIs during any month shall not exceed Rs 10,000 and the total amount loaded during the financial year shall not exceed Rs 1,00,000

5. The amount outstanding at any point of time in such PPIs shall not exceed Rs 10,000

6. The total amount debited from such PPIs during any given month shall not exceed Rs 10,000

7. These PPIs shall be used only for purchase of goods and services. Funds transfer from such PPIs to bank accounts and also to PPIs of same / other issuers shall not be permitted.

8. There is no separate limit on purchase of goods and services using PPIs and PPI issuer may decide limit for these purposes within the overall PPI limit.

9. These PPIs shall be converted into KYC compliant semi-closed PPIs within a period of 24 months from the date of issue of PPI, failing which no further credit shall be allowed in such PPIs. However, the PPI holder shall be allowed to use the balance available in the PPI.

10. PPI issuers shall ensure that this category of PPI is not issued to the same user in future using the same mobile number and same minimum details.

11. PPI issuers shall give an option to close the PPI at any time and outstanding balance, at the time of closure, shall be transferred at the request of the holder to the ‘own bank account of the PPI holder’ (duly verified by the Issuer), after complying with KYC requirements of the PPI holder. PPI issuers shall also allow to transfer the funds ‘back to source’ (payment source from where the PPI was loaded) at the time of closure.

12. The features of such PPIs shall be clearly communicated to the PPI holder by SMS/e-mail/post or by any other means at the time of issuance of the PPI / before the first loading of funds.

Also Read

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RBI to allow inter-operability in prepaid payment instruments

RBI doubles Prepaid Payment Instruments limit to Rs 20,000

3 types of cashless transaction options via prepaid payment instruments for you

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