Master Directions on Issuance and Operation of Prepaid Payment Instruments in India
26 May 2017
The Reserve Bank of India has issued guidelines tightening the rules for prepaid payment instruments, including the popular prepaid meal vouchers. The operation must convert to fully digital by December 31, 2017 and the commonly used paper vouchers will become worthless on that date. Other provisions set maximum value (Rs. 1,00,000), minimum validity (one year), and requirements to maintain the security of the system.
- Direction are called as “The Reserve Bank of India (Issuance and Operation of Prepaid Payment Instruments in India) Directions 2017 (Master Directions)”
- Directions apply to all Prepaid Payment Instrument Issuers, System Providers, System Participants and all prospective Prepaid Payment Instrument Issuers
- Issuance of prepaid Gift instruments: Bank and non-bank entities are permitted to issue prepaid gift instruments subject to the following conditions
- The maximum validity of the prepaid gift instruments shall be three years
- Maximum value of each prepaid gift instrument shall not exceed Rs. 20,000/-
- These instruments shall not be reloadable.
- Cash withdrawal as well as fund transfer shall not be permitted for such instruments. However, PPI Issuers shall permit transfer of outstanding balance in the PPI ‘back to source’ (payment instrument from where the PPI was loaded) in case the purchaser requests for the same.
- KYC details of the purchasers of such instruments shall be maintained by the PPI Issuer and made available on demand.
- Issuance of prepaid Meal instruments: Banks and non-bank entities shall be permitted to issue prepaid meal instruments under B2B arrangements subject to following conditions:
- Such PPIs shall be issued only in electronic form , including cards, and are reloadable. PPIs shall be issued only in electronic form, including cards, and are reloadable
- Entities presently issuing meal vouchers under B2B arrangements in paper voucher form shall commence issuance of such PPIs in electronic form, including cards, at the earliest, but not later than December 31, 2017
- Prepaid meal instruments in paper voucher form shall not be accepted beyond December 31, 2017.
- PPI Issuers shall enter into arrangements only with employers whose due diligence has been completed.
- Such PPIs shall be loaded / reloaded only from the funds deployed by the employers (for instance, from their bank account) with suitable authorization to the PPI Issuers to credit the PPIs of the employees.
- PPI issuers shall obtain and maintain the details of employees (name, address, gender, employee identification etc.) as obtained from the employers, to whom such PPIs are being issued and funds are loaded/reloaded.
- The minimum validity of the prepaid meal instruments shall be one year from the date of loading. Existing paper vouchers shall not be valid beyond December 31, 2017.
- Maximum value in such PPIs at any point of time shall not exceed Rs.1,00,000/
- Cash withdrawal or fund transfer shall not be permitted for such instrument.
We, at BDO India shall keep you updated on developments.
Download to read in detail.