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Informist, Wednesday, Apr. 22, 2026

 

NEW DELHI – The Reserve Bank of India issued draft directions on prepaid payment instruments Wednesday, fixing a ceiling of INR 25,000 per month for person-to-person fund transfers through these instruments. The move is to "develop a conducive framework for long-term growth of Prepaid Payment Instruments with enhanced security of transactions," the central bank said. The RBI has sought feedback on the draft norms by May 22.

 

The RBI's prepaid payment instruments framework mandates licensing for issuers, strict Know Your Customer compliance, and interoperability. RBI's norms on prepaid payment instruments govern instruments that facilitate the purchase of goods or services, financial services, and remittances against stored value, such as physical cards, digital wallets, smart cards, and vouchers. 

 

According to the draft norms, customers who have undergone Know Your Customer verification can hold up to INR 200,000 in their account at any given time. The total amount debited from such prepaid payment instruments in a month should not exceed INR 200,000, the RBI said. "PPI issuer may set limits within these ceilings, considering the risk profile of the PPI holder, other operational risks," it said. 

 

Cash withdrawal against a Know Your Customer-compliant prepaid payment instrument user will be limited to INR 10,000 per month. For customers for whom the Know Your Customer process could not be completed – also called 'Small PPI' – the total amount outstanding at any point in time must not exceed INR 10,000, which is also the limit for the total amount that can be debited during a month. Small PPI should be used only for the purchase of goods or services. Cash withdrawal or person-to-person funds transfers from such PPI will not be permitted, the central bank said. 

 

The draft norms have been issued following a comprehensive review of the existing rules, with a focus on enhancing transaction security, the RBI said.  End

 

Reported by Priyasmita Dutta

Edited by Saji George Titus

 

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