The Reserve Bank of India (RBI) has proposed the introduction of a new type of Prepaid Payment Instrument (PPI) which can be used only for purchase of goods and services up to a limit of Rs 10,000. The PPI can only be used for making digital payments such as bill payments and merchant payments, and can be loaded/reloaded only from a bank account, the apex bank said in its statement on development and regulatory policy. Such PPIs can be issued on the basis of essential minimum details sourced from users; RBI will issue further instructions regarding the PPI by December 31.
PPIs are instruments that facilitate purchase of goods and services, apart from financial services and remittance facilities. These can be loaded and reloaded with cash, debit to a bank account, by credit card, or from other PPIs. They can be loaded with up to Rs 50,000 per month. As of now, banks and non-bank entities are permitted to issue and reload the PPIs. Currently there are 3 types of PPIs as mandated by the RBI – closed system PPIs, semi-closed system PPIs, and open system PPIs.
The RBI, in August, had allowed an extension in timeline for conversion of minimum KYC detail PPIs to full KYC compliant PPIs from 18 months to 24 months. The current RBI guidelines for minimum detail KYC PPIs are:
- These PPIs shall be reloadable in nature and issued only in electronic form, including cards.
- 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.
- The amount outstanding at any point of time in such PPIs shall not exceed Rs.10,000.
- The total amount debited from such PPIs during any given month shall not exceed Rs. 10,000.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.