Master Directions on Issuance and Operation of Prepaid Payment Instruments in India

The Reserve Bank of India has published a circular containing a draft for comments of the Master Directions on Issuance and Operation of Prepaid Payment Instruments in India (issued under Section 18 read with Section 10(2) of Payment and Settlement Systems Act, 2007.) Such Master Directions facilitate the Prepaid Payment Instrument Issuers, System Providers, System Participants and all other Prospective Prepaid Payment Instrument Issuers to have all the extant instructions on the subject at one place. An outline of the act appears below.

1. Introduction

1.1 In exercise of the powers conferred under Section 18 read with Section 10(2) of Payment and Settlement Systems Act, 2007 (Act 51 of 2007) the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the directions hereinafter specified.

1.2 Short title and commencement
i.    These directions shall be called the Reserve Bank of India (Issuance and Operation of Prepaid Payment Instruments in India) Directions 2017 (Master Directions).
ii.    These directions shall come into effect on the day they are placed on the official website of the Reserve Bank of India (RBI).

1.3 Applicability: The provisions of the Master Directions shall apply to all Prepaid Payment Instrument Issuers, System Providers, System Participants and all prospective Prepaid Payment Instrument Issuers

1.4 Purpose
i.    To provide a framework for regulation, authorisation and supervision of entities operating payment systems for issuance of Prepaid Payment Instruments (PPIs) in the country;
ii.    To encourage innovation in this segment in a prudent manner taking into account safety and security along with customer protection and convenience.

2. Definitions

3. Eligibility to issue semi-closed and open system PPIs

4. Cross Border Transactions

5. Capital and other eligibility requirements

6. Authorisation Process for non-bank entities

7. Safeguards against Money Laundering (KYC/AML/CFT) Provisions

8. Issuance, loading and reloading of PPIs

9. Types of Prepaid Payment Instruments

9.1 The maximum value of any prepaid payment instrument, where specific limits have not been prescribed, shall not exceed Rs 50,000/-.
9.2 Issuance of Semi-closed PPIs by banks and non-bank PPI Issuers
(i) PPIs upto Rs.20,000/- by accepting minimum details of the customer
(ii) PPIs upto Rs.1,00,000/- with full KYC2
9.3 Migration of existing minimum details semi-closed PPIs issued by banks and non-banks
9.4 Issuance of open system PPIs by banks

10. Specific categories of Prepaid Payment Instruments
10.1 Issuance of prepaid Gift instruments
10.2 Issuance of prepaid Meal instruments
10.3 Issuance of PPIs for credit of cross border inward remittance
10.4 Issuance of PPI for Mass Transit Systems (PPI-MTS)
10.7 Action to be initiated in case of existing specific categories of PPIs issued by banks:

11. Deployment of Money Collected

12. Validity

13. Transactions Limits

14. Redemption

15. Security, Fraud prevention and Risk Management Framework

16. Customer Protection and Grievance Redressal Framework

17. System Audit

18. Interoperability

19. Reporting requirement

Document Details

Document Type: 
Document Topic: 
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Authoring Country: 
Originating Country or Trade Block: 
Year of Document: 
2017
Date of Document: 
Monday, March 20, 2017
Document Authors: 
Nanda S. Dave (Chief General Manager-in-Charge)

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