The Reserve Bank of India ("RBI"), pursuant to its circular no. RBI/2019-20/123 DPSS.CO.PD.No.1198/02.14.006/2019-20 dated 24 December, 2019, issued guidelines to all PPI issuers introducing a new type of semi-closed PPI bearing various features including the following:
- requirement of minimum details such as a mobile number verified with One Time Pin (OTP) and a self-declaration of name and unique identity / identification number of any 'mandatory document' or 'officially valid document' (OVD) of the PPI holder before issuing a PPI;
- PPIs shall be reloadable and in card or electronic form and loading/reloading to be possible only from a bank account;
- amount loaded in such PPIs not to exceed Rs. 10,000 in any given month and Rs. 1,20,000 in any financial year;
- amount outstanding at any point of time in such PPIs not to exceed Rs. 10,000; and
- PPIs to be used only for purchase of goods and services and not for funds transfer.
The PPI Master Directions issued by the RBI vide DPSS.CO.PD.No.1164/02.14.006/2017-18 dated October 11, 2017 (updated as on August 30, 2019) has also been modified accordingly to reflect the above inclusions.
DSK Legal's Observations: Prepaid payment instruments continue to play an important in promoting digital payments in India. The above circular (which also modifies the master directions issued by the RBI in the matter), is a move towards encouraging small value digital payments, requires minimal sharing of KYC information (as opposed to full KYC disclosure) and is mainly to boost the use of PPIs in the goods and services sectors.
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