The Reserve Bank of India on Friday issued Master Directions on Prepaid Payment Instruments (PPIs) with fresh classification of the instruments.
“Keeping in view the recent updates to PPI guidelines, it has been decided to issue the Master Directions afresh,” the RBI said.
No entity can set up and operate payment systems for PPIs without prior approval or authorisation of the RBI, it stated.
The master directions classify PPIs in two categories – small PPIs and full KYC PPIs. They were earlier classified as closed systems, semi-closed systems and open system PPIs.
“Small PPIs: Issued by banks and non-banks after obtaining minimum details of the PPI holder. They shall be used only for purchase of goods and services. Funds transfer or cash withdrawal from such PPIs shall not be permitted,” the RBI said.
PPI Classification
Small PPIs can have cash upto ₹10,000 loaded per month, not exceeding ₹1.2 lakh in a year.
Full-KYC PPIs will be issued by banks and non-banks after completing Know Your Customer (KYC) of the PPI holder.
“These PPIs shall be used for the purchase of goods and services, funds transfer or cash withdrawal,” it further said, adding that the amount outstanding shall not exceed ₹2 lakh at any point of time.
The RBI has also said that PPI issuer shall have a board-approved policy for PPI interoperability.
Where PPIs are issued in the form of wallets, interoperability across PPIs should be enabled through UPI. Where PPIs are issued in the form of cards (physical or virtual), the cards should be affiliated to the authorised card networks, it said.
PPI for mass transit systems should remain exempted from interoperability, while Gift PPI issuers (both banks and non-banks) have the option to offer interoperability.
“Interoperability shall be mandatory on the acceptance side as well. QR codes in all modes shall be interoperable by March 31, 2022,” it further said.
The RBI has also said the PPI issuer shall put in place a formal, publicly disclosed customer grievance redressal framework, including designating a nodal officer to handle customer complaints or grievances, the escalation matrix and turn-around-times for complaint resolution.
In the case of PPIs issued by banks and non-banks, customers shall have recourse to the Banking Ombudsman Scheme and Ombudsman Scheme for Digital Transactions respectively for grievance redressal.