RBI allows banks, non-banks to issue PPIs to commuters for public transport
New Delhi, Feb 23, 2024
PPIs are instruments that facilitate the purchase of goods and services, financial services, remittance facilities etc, against the value stored therein
The Reserve Bank of India (RBI) on Friday amended the Master Direction on prepaid payment instruments (PPI), allowing banks and non-bank PPI issuers to give these instruments for public transport.
In an announcement, the RBI said, "To provide convenience, speed, affordability, and safety of digital modes of payment to commuters for transit services, it has been decided to permit authorised bank and non-bank PPI issuers to issue PPIs for making payments across various public transport systems."
The instructions will come into effect immediately.
The Master Directions on PPIs were originally issued in 2021. According to it, PPIs are instruments that facilitate the purchase of goods and services, financial services, remittance facilities etc, against the value stored therein.
PPIs that require RBI approval/authorisation before issuance are classified under two types, small PPIs, and full-KYC PPIs.
Small PPIs are issued by banks and non-banks after obtaining the minimum details of the PPI holder. These are used only for the purchase of goods and services. Funds transfer or cash withdrawal from such PPIs is not permitted.
On the other hand, full-KYC PPIs are issued by banks and non-banks after completing the Know Your Customer (KYC) of the PPI holder. These PPIs are used for the purchase of goods and services, funds transfer or cash withdrawal.
Banks and non-banks can issue PPIs after obtaining necessary approval from the RBI.
In June last year, the RBI had allowed non-banking PPI issuers to issue e-RUPI vouchers. These vouchers are received by a beneficiary on their phone in the form of a QR code or SMS.
"These measures will make the benefits of e-RUPI digital voucher accessible to a wider set of users and further deepen the penetration of digital payments in the country," RBI governor Shaktikanta Das had then said.
[The Business Standard]
