The Reserve Bank of India has proposed to introduce a new type of prepaid payment instrument (PPI) in a bid to facilitate its usage and promote digital payments. The new type of PPI can only be used to buy goods and services online up to a limit of Rs 10,000.
In its statement on developmental and regulatory policies, RBI said that such PPIs can be issued on the basis of essential minimum details sourced from the customer.
The loading or reloading of this PPI can only be done from a bank account and can be used only to make digital payments such bill payments, merchant payments, etc.
Further instructions in this regard will be issued by December 31, 2019, the central bank said.
A PPI is a payment instruments that allows for purchase of goods and services, including financial services, remittance facilities from the amount stored on such an instrument.
There are three types of PPIs issued in India: closed system PPIs, semi-closed system PPIs and open system PPIs.
A gift card would classify as a closed system PPI, while Paytm, Mobikwik, etc classify as semi-closed. An open system PPI would be travel cards or debit and credit cards.
While issuing a closed system does not require RBI approval, to issue semi-closed and open system PPIs, banks need to obtain an approval from RBI.
Non-bank entities, which comply with the eligibility criteria can issue only semi-closed system PPIs, after obtaining authorization from RBI.
Apart from PPIs, RBI also said that it will also be revealing steps to improve the safety of ATMs by the end of this month.
RBI’s Monetary Policy Committee (MPC) which met on Thursday decided to keep the repo rate unchanged at 5.15%. it also revised the GDP growth estimate to 5% for 2019-20 from 6.1% projected in its October policy.