The Reserve Bank of India (RBI) on 27 August issued master directions on prepaid payment instruments (PPIs) with new classifications and to provide a framework for their authorisation, regulation and supervision.
New companies setting up and operating payment systems for PPIs will require prior RBI approval or authorisation.
The master directions have replaced the earlier classification of closed system, semi-closed system and open system PPIs, with two new categories:
(1) Small PPIs. These are PPIs issued by banks and non-banks after obtaining minimum details of the PPI holder. These are to be used only for the purchase of goods and services. Fund transfers or cash withdrawals from such PPIs shall not be permitted. The PPIs can have cash up to INR10,000 loaded per month and up to a maximum of INR120,000 in a year; and
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The Business Law Digest is researched and written by Mithun Varkey.