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RBI introduces new pre-paid instrument for mass transit services


The Reserve Bank of India (RBI) introduced a new semi-closed pre-paid instrument (PPI) for mass transit services to help move on from cash-based systems to electronic means. The new instrument will allow users to load Rs 2,000 and have a minimum validity period of six months from the date of issue.

“In the process of moving from cash based payments to electronic payments, the migration of micro and small value cash payments can play a significant role in achieving the vision of less-cash society. One such area where a large number of small value cash payments take place relates to mass transit systems,” the RBI said in a circular.

Some of the other features of the new instrument are:

– No cash-out or refund will be permitted from these PPIs.

– The instrument can also be used at other merchants whose activities are allied to or are carried on within the premises of the issuing mass transit system. An example:  The Delhi Metro could issue a wallet service which can be used to buy food at the food stalls in the station.

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– The issuer may decide upon the desired level of KYC, if any, for such PPIs

– The instrument must have an Automated Fare Collection application related to the transit service.

Two open wallets introduced

It’s worth noting that in December the RBI also introduced 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.

– 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.

– The regulator also allowed prepaid wallets for family members from a single bank account. 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.

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Account aggregator

The Central bank earlier this month also said it would devise a regulatory mechanism for a non-banking finance company (NBFC) which will function as an account aggregator to help citizens access and operate all their accounts across financial institutions in a common format.An account aggregator such as this will help, for example, seamless transfer of funds from say a fixed deposit held with one back into a pension scheme.

Image source: Flickr user Ravi Karandeekar

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