The Reserve Bank of India (RBI) on 3 December 2014 relaxed the norms for Pre-paid Payment Instruments (PPI) and doubled the limit of PPI from 50000 rupees to one lakh rupees.
The move would help in achieving the objective of limiting cash transactions in the system.
Highlights of RBI norms on PPI
• The maximum validity of gift cards has been enhanced from one year to three years. Other provisions of PPI guidelines with respect to gift cards will continue.
• RBI also allowed issue of multiple PPIs by banks from fully-KYC compliant bank accounts for dependent or family members.
• Only one card can be issued to one beneficiary.
• The bank may put in place mechanisms to monitor and report suspicious transactions on these PPIs to Financial Intelligence Unit India (FIU-IND).
• The central bank also permitted banks to issue rupee denominated PPIs for visiting foreign nationals and NRIs.
• However, this would be subject to certain conditions like the cards can be issued by overseas branches of banks in India directly or it can be issued by co-branding with the exchange houses/money transmitters up to a maximum amount of 2 lakh rupees by loading from a KYC compliant bank account.
• Such PPIs should be activated by the bank only after the traveller arrives in India and cash withdrawal will be restricted to 50000 rupees per month.
• The cards should be issued strictly for use in India and transactions should be settled in Indian rupee.
Prepaid payment instruments
Prepaid payment instruments (PPIs) are those which facilitate purchase of goods and services against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holder, by cash, by debit to a bank account, or by credit card.
When: 3 December 2014