Close on the heels of issuing new guidelines for payments banks, the Reserve Bank of India has relaxed some of its norms for pre-paid instruments (PPI) and also introduced new categories of PPIs which can be issued by banks. The amendments to existing guidelines will apply to the semi-closed category of instruments.
Semi-closed instruments are those which can be used for purchase of goods and services, including financial services at a group of clearly identified merchant locations/ establishments which have a specific contract with the issuer to accept the payment instruments. These instruments do not permit cash withdrawal or redemption by the holder. Some major changes:
1. Wallet limit increased, Gift Cards valid for longer
- For semi-closed PPIs with full KYC. the limits have been raised from Rs 50,000 to Rs 1,00,000. The balance in the PPI should not exceed Rs. 1,00,000/- at any point of time.
- Gift cards’ validity has been enhanced from one year to three years. Other provisions of PPI guidelines with respect to Gift Cards will continue to be applicable.
2. Banks can now issue Prepaid Wallets that allow cash withdrawals
The RBI also decided to allow two new categories of open system of pre-paid instruments. Open PPIs are instruments which can be used for purchase of goods and services, including financial services like funds transfer at any card accepting merchant locations (point of sale terminals) and also permit cash withdrawal at ATMs / BCs.
3. Prepaid wallets for family members from a single bank account allowed
- Such PPIs may be issued only by loading the value from fully KYC-compliant bank account of the purchasers. The beneficiary has to be a dependent or family member.
- The account holders purchasing the PPIs need to provide the minimum details (such as name, address and contact details) of the intended beneficiary. Only one card can be issued to one beneficiary.
- The transaction and monthly limits are currently Rs 10,000 per transaction with a monthly ceiling of Rs 25,000 will be applicable for such PPIs.
- The other guidelines as applicable to open system PPIs will also be applicable to these cards.
4. Foreign nationals can buy rupee based prepaid wallets
Banks will now be permitted to issue open system rupee denominated non-reloadable PPIs to non-resident Indians and foreign nationals visiting India & PPIs co-branded with exchange houses/money transmitters subject to the following conditions:
- The cards can be issued by overseas branches of banks in India directly or by cobranding with the exchange houses/money transmitters upto a maximum amount of Rs.2 lakhs by loading from a KYC compliant bank account.
- Such PPIs should be activated by the bank only after the traveller arrives in India.
- Cash withdrawal from such PPIs will be restricted to Rs 50,000 per month.
- The cards should be issued strictly for use in India and transactions settled in Indian Rupee.
- An individual can hold only one card at a time and the card should be non- transferable. The issuing bank has to put in place necessary arrangements to ensure the same.
- These PPIs may be used only for transactions permissible under the extant foreign exchange regulations.
- Transaction history have to be maintained by the banks.
- The process put in place by the bank for refund of un-utilised portion of the PPI amount in India has to adhere to the extant foreign exchange regulations.
Earlier in November, the RBI renewed Vodafone India’s mobile wallet licence. Last year, Idea Cellular, Reliance Industries, Paytm Mobikwik, QwikCilver Solutions Pvt Limited and DigitSecure India Pvt Limited got their pre-paid payment instrument licence from the RBI.
(Update: headline changed)