The Reserve Bank has introduced a new type of prepaid payment instrument (PPI) which can only be used for the purchase of goods and services up to a limit of Rs 10,000 per month. This comes as a boost to small ticket transactions, especially at grocery and local stores.
"To give impetus to small value digital payments and for enhanced user experience, it has been decided to introduce a new type of semi-closed PPI,” the RBI said in a circular on Tuesday. PPIs are financial instruments that facilitate the purchase of goods and services against the value stored on such instruments.
The RBI stated that the amount in these PPIs in any month will not exceed Rs 10,000 and in a similar vein, no more than Rs 1,20,000 can be loaded in a year.
“The amount outstanding at any point of time in such PPIs shall not exceed Rs 10,000,” the RBI stated.
In its notification, the RBI stated that these PPIs will only be used for the purchase of goods and services, and cannot be transferred.
According to the circular, issuers of the PPI will have to provide an option to close the instrument at any time, and also the funds to be transferred and also allow to transfer the funds 'back to source' at the time of closure".
As per the circular, such PPIs shall be issued by bank and non-bank 'PPI Issuers' after obtaining minimum details of the holder.
The details required for one to obtain a PPI is a mobile number which can be verified with an OTP, and one to self-declare an identity document. Ola Money and Paytm are both examples of PPIs and this move comes as a boost to these companies. These PPIs can be recharged by bank accounts, cards, or from other PPIs.
"The directive is issued under Section 18 read with Section 10(2) of Payment and Settlement Systems Act, 2007 and is effective from the date of issuance of this circular," the circular added.
With IANS inputs