RBI launches new prepaid payment instrument for digital transactions up to Rs 10,000

The Reserve Bank of India (RBI) on Tuesday introduced a new type of semi-closed prepaid payment instrument (PPI), which can be used only for purchase of goods and services up to a limit of Rs 10,000. Money will be loaded or reloaded in the new PPI only from a bank account for making digital payments such as bill payments, merchant payments, etc. The new PPI could be issued on the basis of essential minimum details sourced from the customer.

The central bank, in its monetary policy statement on December 5, had proposed to introduce a new type of PPI to give impetus to small-value digital payments as well as for enhanced user experience. PPIs have been playing an important role in promoting digital payments and bringing in the new PPI will further facilitate its usage, the RBI had said in a statement accompanying its monetary review.

What is PPI?

PPI is as an instrument that facilitates purchase of goods and services, including financial services, remittance facilities, etc., against the value stored on such instruments. Presently, three types of PPIs are issued in the country - closed system PPIs, semi-closed system PPIs and open system PPIs - which can be issued in the form of cards and mobile wallets.

MobiKwik, Oxigen, Paytm, ItzCash, and Ola Money are some of the popular mobile wallets in the country. Currently, a mobile wallet does not allow customers to send or receive money from a wallet run by another company.

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Key features of new type of semi-closed PPI

• PPIs will be issued by bank and non-bank PPI Issuers after obtaining minimum details of the PPI holder.
• The minimum details will necessarily include a mobile number verified with One Time Pin (OTP) and a self-declaration of name and unique identification number of any 'mandatory document' or 'officially valid document' (OVD) listed in the Know Your Customer (KYC) direction issued by RBI.
• These PPIs will be reloadable in nature and issued in card or electronic form. Loading or reloading will be only from a bank account.
• The amount loaded in such PPIs during any month will not exceed Rs 10,000 and the total amount loaded during the financial year will not exceed Rs 1,20,000.
• The amount outstanding at any point of time in such PPIs will not exceed Rs 10,000.
• These PPIs will be used only for purchase of goods and services and not for funds transfer.
• PPI issuers will provide an option to close the PPI at any time and also allow to transfer of funds 'back to source' at the time of closure.
• The features of such PPIs will be clearly communicated to the PPI holder by SMS or e-mail or post or by any other means at the time of issuance of the PPI or before the first loading of funds.

How can a PPI be recharged?

PPIs can be recharged by cash or debit to a bank account or by credit card or from other PPIs. As of now, banks and non-bank entities are allowed to offer and reload such payment instruments. No interest is payable on PPI balances.

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Is there any limit on loading of PPIs by cash or electronic means?

Yes, the cash loading of PPIs is limited to Rs 50,000 per month subject to overall limit of the PPI. The total amount loaded during the financial year will not exceed Rs 1,20,000.

Edited by Chitranjan Kumar