Millennium Post

RBI proposes prepaid card for transactions of goods & services up to Rs 10,000

Mumbai: The Reserve Bank on Thursday proposed to introduce a prepaid payment instrument (PPI) that could be used only for transactions of goods and services worth up to Rs 10,000.

PPIs have been playing an important role in promoting digital payments and bringing in the new PPI will further facilitate its usage, as per an RBI statement issued post announcement of the monetary review on Thursday.

"To further facilitate its (PPI) usage, it is proposed to introduce a new type of PPI which can be used only for purchase of goods and services up to a limit of Rs 10,000," the statement said.

The central bank said the loading and reloading of such PPIs can be done only from a bank account and used for making bill payments and merchant payments.

Such PPIs can be issued on the basis of essential minimum details sourced from the customer.

The RBI said it will give instructions in this regard by December 31, 2019.

PPIs are instruments to facilitate purchase of goods and services, including financial services, remittance facilities among others against the value stored on such instruments.

These can be loaded and reloaded by cash or debit to a bank account or by credit card or from other PPIs up to a limit of Rs 50,000 per month. As on now, banks and non-bank entities are permitted to issue and reload such payment instruments.

There are currently three kinds of PPIs allowed by RBI --closed system PPIs, semi-closed system PPIs and open system PPIs.

The banking regulator also announced to allow the International Financial Service Centre Banking Units (IBUs) to open foreign currency current accounts of their corporate borrowers in order to facilitate ease of operations.

As regard to liquidity coverage ratio, it has also allowed the IBUs to accept fixed deposits in foreign currency of less than one year tenor from non-bank entities and consequently remove the current restriction on premature withdrawal of deposits.

"However, the current prohibition on acceptance of retail deposits including from high net worth individuals (HNIs) will continue. Necessary instructions are being issued shortly," the RBI said.

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