RBI stops non-bank PPI issuers from loading portfolios, cards through credit lines

The Reserve Bank has asked issuers of non-bank prepaid payment instruments (PPIs) not to top up their wallets and credit card cards or pre-set borrowing limits.

PPIs are instruments that facilitate the purchase of goods and services, financial services and funds for remittances for the value stored in them.

According to the Basic Instruments on Prepaid Payment Instruments (PPI-MD) issued by the central bank, PPIs are allowed to be recharged / recharged in cash, bank debit, credit and debit cards, PPIs and other payment instruments issued by regulated entities. in India and will only be in INR.

Sources said the RBI had sent a message about the ban to all authorized non-bank PPI issuers.

According to them, the RBI statement read: “PPI-MD does not allow charging PPI from credit lines. Such a practice, if followed, must be stopped immediately. Any non-compliance in this regard may lead to criminal proceedings under the provisions of the Payment and Settlement Systems Act 2007.

Mihir Gandhi, a leader in payment transformation at PwC India, said charging money through a credit line is limited.

“There was a credit line that was used to finance many prepaid wallets / cards. “Some fintech business models will be affected,” he said.

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Banks and NBFC will have to limit the provision of credit lines for these financial technologies in order to top up prepaid instruments.

“Banks / NBFCs may not have full visibility of where prepaid funds or end-customer details are used,” he added.

PPIs are issued as cards, wallets and in any form / tool that can be used for transactions.

The central bank has banned the issuance of PPIs in the form of paper vouchers.

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