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RBI issues fresh master directions on Prepaid Payment Instruments (PPIs)

The Reserve Bank of India (RBI) on Friday issued Master Directions on Prepaid Payment Instruments (PPIs) with fresh classification of the instruments.

"Keeping in view the recent updates to PPI guidelines, it has been decided to issue the Master Directions afresh," the RBI said. No entity can set up and operate payment systems for PPIs without prior approval or authorisation of the RBI, it stated.

The master directions classify PPIs in two categories small PPIs and full KYC PPIs. They were earlier classified as closed systems, semi-closed systems and open system PPIs.

"Small PPIS: Issued by banks and non-banks after obtaining minimum details of the PPI holder. They shall be used only for purchase of goods and ser vices. Funds transfer or cash withdrawal from such PPIS shall not be permitted," the RBI said.

PPI classification Small PPIs can have cash up to Rs. 10,000 loaded per month, not exceeding Rs. 1.2 lakh in a year.

Full-KYC PPIs will be issued by banks and non-banks after completing Know Your Customer (KYC) of the PPI holder.

"These PPIs shall be used for the purchase of goods and ser vices, funds transfer or cash withdrawal," it further said, adding that the amount out standing shall not exceed Rs. 2 lakh at any point of time.

The RBI has also said that PPI issuer shall have a board-approved policy for PPI interoperability. Where PPIs are issued in the form of wallets, interoperability across PPIs should be enabled through UPI. Where PPIs are issued in the form of cards (physical or virtual), the cards should be affiliated to the authorised card networks, it said.

PPI for mass transit systems should remain exempted from interoperability, while Gift PPI issuers (both banks and non banks) have the option to offer interoperability.

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