The RBI on Monday proposed to fix the upper limit for Pre-paid Payment Instruments at Rs 1 lakh in view of growing usage of PPIs for purchase of goods and services. The RBI had received requests from stakeholders and other entities for relaxations in certain areas while strengthening the norms for safety and security, risk mitigation and customer protection aspects related to usage of PPIs.
The central bank has sought comments on draft circular on Master Directions on Issuance and Operation of Pre-paid Payment Instruments (PPIs) in India till March 31. PPIs are payment instruments that facilitate purchase of goods and services, including financial services, remittance facilities against the value stored on such instruments.
There are three types of PPIs — Closed system (valid under the issuing enity only), Semi-closed system (valid in group of clearly identified merchant locations/establishments) and Open system (these are issued by banks and can be used at any merchant locations). Amount in a PPI should not exceed Rs 1 lakh at any point of time if the customer provides full KYC and Rs 20,000 if the customer provides minimum KYC details to the PPI issuing entity, the draft said.
Further, only banks shall be permitted to issue open system PPIs after full KYC in addition to semi closed PPIs. The draft also said that the maximum value of any prepaid payment instrument, where specific limits have not been prescribed, should not exceed Rs 50,000. Also, cash loading to PPIs should be limited to Rs 50,000 per month subject to overall limit of the PPI.
The PPIs could be issued as smart cards, magnetic stripe cards, Internet wallets, mobile wallets, and any instrument which can be used to access the PPI and to use the amount therein. PPIs in the form of paper vouchers cannot be issued, the draft proposes.
The draft further said maximum value in prepaid gift instrument should not exceed Rs 20,000 and in case of PPI for Mass Transit Systems it should not be more than Rs 3,000 at any time. PPIs could be loaded/reloaded by cash, by debit to a bank account, by credit and debit cards, and other PPIs.
The major changes proposed relate to change in entry point norms, KYC, rationalisation of types of PPIs, customer service and protection, risk mitigation measures, complaint redressal mechanism, forfeiture of unutilised balances, fraud monitoring and reporting requirements, among others.
The draft also said entities, seeking approval/authorisation from the RBI for issuance of PPIs should have a minimum positive net worth of Rs 25 crore. The receipt of fresh applications from banks and non-banks for grant of authorisation to operate a payment system for PPI under Payment and Settlement Systems Act, 2007 was suspended till February 28. “It has now been decided to extend the date till release of final guidelines i.e. April 30,” the RBI added.