The Reserve Bank of India (RBI), in its Statement on Development and Regulatory Policies, has proposed to introduce a new type of prepaid payment instrument (PPI) on 24TH Dec, 2019 ..
It is a semi-closed prepaid payment instrument (PPI), which can be used only for purchase of goods and services up to a limit of Rs 10,000.
The loading /reloading of such PPI will be only from a bank account linked with the customer’s verified mobile number and used for making only digital payments such as bill payments, merchant payments, etc.
WHAT IS A PREPAID PAYMENT INSTRUMENT ?
PPI are those instruments which facilitate the purchase of goods and services against the value stored on such instruments. The value stored on them is paid by the holder using a medium (cash, debit card, credit card etc). Some of the main PPI’s include , Paytm, Mobikwik , Debit/ Credit cards etc. They play a very important role in promoting digital payments.
At present, there are 3 types of PPI’s which are allowed by RBI –
- Closed system PPIs– Usually issued by businesses for buying their own products / services and do not permit cash withdrawal.
- Semi-closed system PPIs- They are issued by banks or non banks for purchase of goods & services and do not permit cash withdrawal.
- Open system PPIs – PPIs under this system can only be issued by banking institutions that have been approved by the RBI to facilitate purchases, remittances, cash withdrawals, etc.
KEY FEATURES OF NEW SEMI CLOSED PPI
- PPI’S will be issued by Banks and Non Bank PPI players for upto Rs 10,000 after obtaining minimum details of PPI holder.
- The minimum details required for verification shall include –
- A mobile number verified with One time Pin (OTP).
- A self declaration of name
- Unique identity / identification number of any ‘mandatory document’ or ‘officially valid document’ (OVD) listed in the KYC Direction.
- An annual limit of Rs 1.2 lakh and a monthly limit of Rs 10,000 has also been fixed by the RBI, that can be recharged on these accounts.
- These PPIs shall be used only for the purchase of goods and services and not for funds transfer.
- The amount outstanding at any point of time in such PPIs shall not exceed Rs 10,000.
- The PPI’s will be reloadable in nature from a bank account & issued in card or electronic form.
- Holder shall have an option to close the PPI at any time and the outstanding balance on the date of closure shall be allowed to be transferred ‘back to source.’
Thus, the newly issued PPI will ensure seamless flow of the transaction. As compared to other PPIs, it will be easier to obtain such PPIs .