The Reserve Bank has requested non-bank pay as you go cost instrument (PPI) issuers to not load their wallets and playing cards from credit score strains or preset borrowing limits.
PPIs are devices that facilitate buy of products and companies, monetary companies, and remittance amenities, towards the worth saved therein.
As per the Master Directions on Prepaid Payment Instruments (PPI-MD) issued by the central financial institution, PPIs are permitted to be loaded / reloaded by money, debit to a checking account, credit score and debit playing cards, PPIs and different cost devices issued by regulated entities in India and shall be in INR solely.
Sources mentioned the RBI has despatched a communication relating to the ban to all authorised non-bank PPI issuers.
As per them, the RBI’s communication learn: “The PPI-MD does not permit loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately. Any non-compliance in this regard may attract penal action under provisions contained in the Payment and Settlement Systems Act, 2007.” Mihir Gandhi, Payments Transformation Leader, PwC India mentioned the loading of cash by way of credit score line has been restricted.
“There was a credit line which was used to fund multiple prepaid wallets / cards. Some fintechs’ business models will be impacted,” he mentioned.
Banks and NBFCs should prohibit offering credit score strains to those fintechs to load the pay as you go devices.
“Banks / NBFCs may not have the complete visibility of where the funds of the prepaid instruments are being used or the end customer details,” he added.
PPIs are issued as playing cards, wallets and in any such type/ instrument which can be utilized for transactions.
The central financial institution has barred issuance of PPI within the type of paper vouchers.