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In a bid to widen the scope of prepaid payment instruments, the Reserve Bank of India has permitted banks to issue such instruments to listed corporate entities for onward issuance to their employees.
Currently, prepaid instruments are issued by banks to: government organisations for onward issuance to the beneficiaries of government sponsored schemes for loading of funds from such schemes; and financial institutions for loading of one-time/periodical payments by these entities to their customers.
Banks also issue such instruments to beneficiaries under money transfer service scheme for loading of cross-border inward remittances received by them. Further, prepaid gift instruments are issued by banks, non-banking finance companies and other persons.
A string of conditions
The issue of prepaid payment instruments by banks to corporate entities, which are listed on any of the stock exchanges in India, for onward issuance to their employees is subject to a string of conditions.
These prepaid payment instruments, as per the RBI's policy guidelines, can be loaded only by debit to the bank account, which has been subjected to the full ‘know your customer' procedure, maintained by the corporate with the same bank.
Reloading of these instruments can be carried out only by debit to the corporate's account.
The maximum value outstanding on individual prepaid payment instruments at any point of time cannot exceed Rs 50,000.
Banks should facilitate transfer of funds from such prepaid payment instruments to a regular bank account of the employee concerned, if requested for, the RBI said. Banks will be responsible for all customer service aspects related to these instruments.
Identity verification
Verification of the identity of the employee will be the responsibility of the corporate concerned. The corporate is also required to make available details of bank accounts (if any) of the employees to the bank.
Banks are required to put in place proper systems to capture and maintain details of the employees to whom the cards are issued by the corporate along with copies of photograph and identity proof of such employees.
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