RBI issues final norms on pre-paid payment system

The Reserve of India has unveiled the final guidelines for issuance and operation of pre-paid payment instruments like smart cards...

The Reserve of India has unveiled the final guidelines for issuance and operation of pre-paid payment instruments like smart cards,magnetic stripe cards,internet accounts,internet wallets and mobile accounts in India.

The apex bank said the maximum value of any pre-paid payment instrument should not exceed Rs 50,000. Banks and NBFCs which comply with the capital adequacy requirements,prescribed by RBI from time-to-time,will be permitted to issue pre-paid payment instruments. All other issuers should have a minimum paid-up capital of Rs 100 lakh and positive net owned funds.

Pre-paid payment instruments issued as smart cards,magnetic stripe cards,internet accounts,internet wallets,mobile accounts,mobile wallets,paper vouchers and any such instruments facilitate purchase of goods and services against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holder,by cash,by debit to a bank account or by credit card.

Only banks which have been permitted to provide mobile banking transactions by the RBI will be permitted to launch mobile based pre-paid payment instruments mobile wallets amp; mobile accounts. NBFCs and other persons would be permitted to issue only semi-closed pre-paid payment instruments which are redeemable at a group of clearly identified merchant locations and establishments that contract specifically with the issuer to accept the payment instrument.

The central bank will allow semi-closed system payment instruments up to Rs 1,000 against any identity document furnished by the customer subject to reporting of annual turnover/suspicious transactions. The RBI said that under no circumstances,more than one active instrument should be issued to the same person by the same issuer.

Pre-paid payment instruments up to Rs 5,000 can be issued by accepting any officially valid documents defined under Rule 2d of Prevention of Money Laundering Act,as proof of identity. Such instruments shall not permit cash withdrawal, it said.

Semi-closed pre-paid instruments which permit only payment of utility bills/ essential services up to a limit of Rs 10,000 can be issued without any KYC norms being undertaken by the issuer. The utility bills/essential services will include only electricity bills,water bills,telephone/mobile phone bills and insurance premium,cooking gas payments,ISP for Internet/broadband connections,cable/DTH subscriptions and citizen services by government or government bodies.

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According to the RBI,the persons issuing such instrument may ensure that these instruments are made acceptable only at institutions which maintain the full identity of the customers. Semi-closed pre-paid payment instruments can be issued to institutions/companies for further issuance by these institutions/companies to their employees or other beneficiaries.