The Reserve Bank has asked non-bank prepaid payment instrument (PPI) issuers not to load their wallets and cards from a preset credit or loan line.
The Reserve Bank has asked non-bank prepaid payment instrument (PPI) issuers not to load their wallets and cards from a preset credit or loan line. PPIs are instruments that facilitate the purchase of goods and services, financial services, and the means of transferring money, relative to the value stored therein.
According to the Main Guide to Prepaid Instruments (PPI-MD) issued by the central bank, PPI is allowed to top up/reload with cash, debit to bank accounts, credit and debit cards , PPI and other means of payment due to regulation issue entities in India and will be in INR only.
Sources said the RBI has sent notices regarding the ban to all authorized non-bank PPI issuers.
According to them, the RBI’s notice read: “PPI-MD does not allow PPI downloads from lines of credit. Such practice, if followed, should be stopped immediately. Any non-compliance in the matter This matter may result in punitive action under the provisions of the Settlement and Payment Systems Act, 2007.”
Mihir Gandhi, Payments Transformation Leader, PwC India says credit line top-ups have been restricted.
“There is a line of credit used to fund many prepaid wallets/cards. Some fintech business models will be affected,” he said.
Banks and NBFCs will have to restrict credit lines to these fintechs to load prepaid tools.
“Banks/NBFCs may not have full visibility into where the funds of prepaid instruments are being used or end-customer details,” he added.
PPIs are issued as cards, wallets and in any such form/instrument that can be used for transactions.
The central bank has banned the issuance of PPIs in the form of paper documents.
