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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.

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