RBI introduces new prepaid payment instrument

The Reserve Bank has introduced a new type of prepaid payment instrument (PPI) which could be used only for purchase of goods and services up to a limit of Rs 10,000 per month.

"To give impetus to small value digital payments and for enhanced user experience, it has been decided to introduce a new type of semi-closed PPI...," RBI said in a circular on Tuesday.

PPIs are financial instruments that facilitate the purchase of goods and services against the value stored on such instruments.

As per the circular, such PPIs shall be issued by bank and non-bank 'PPI Issuers' after obtaining minimum details of the holder.

"The amount loaded in such PPIs during any month shall not exceed Rs 10,000 and the total amount loaded during the financial year shall not exceed Rs 1,20,000," the circular said.

"The amount outstanding at any point of time in such PPIs shall not exceed Rs 10,000."

According to the circular, the PPI issuers shall provide an option to close the instrument at "any time and also allow to transfer the funds 'back to source' at the time of closure".

"The directive is issued under Section 18 read with Section 10(2) of Payment and Settlement Systems Act, 2007 and is effective from the date of issuance of this circular," the circular added.