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Tuesday, April 28, 2009

Prepaid Instruments-Debit/smart cards shall comply with RBI directions now

Issuance and Operation of Pre-paid Payment Instruments in India (Reserve Bank) Directions, 2009

All persons proposing to operating payment systems involved in the issuance of Pre-paid Payment Instruments shall seek authorization from the Department of Payment and Settlement Systems, Reserve Bank of India, under the Payment and Settlement System Act 2007.


Pre-paid Payment Instruments: Pre-paid payment instruments are payment instruments that facilitate purchase of goods and services against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holder, by cash, by debit to a bank account, or by credit card.

The pre-paid instruments can be issued as smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets, paper vouchers and any such instruments which can be used to access the pre-paid amount (collectively called Payment Instruments hereafter).

The pre-paid payment instruments that can be issued in the country are classified under the three categories viz. (i) Closed system payment instruments (ii) Semi-Closed system payment instruments and (iii) Open system payment instruments.


Only banks which have been permitted to provide Mobile Banking Transactions by the Reserve Bank of India shall be permitted to launch mobile based pre-paid payment instruments (mobile wallets & mobile accounts) subject to compliance of Capital Adequacy Requirements of RBI.

Non-Bank Finance Companies (NBFC) would be permitted to issue only semi-closed system pre-paid payment instruments subject to compliance of Capital Adequacy Requirements of RBI.


All other persons shall have a minimum paid-up capital of Rs. 100 lakhs and positive net owned funds would be permitted to issue only semi-closed system pre-paid payment instruments.


Persons authorized under FEMA to issue foreign exchange pre-paid payment instruments and where such persons issue such instruments as participants of payment systems authorised by the Reserve Bank of India, are exempt from the purview of these guidelines as they are subject to Current Account Transaction Rules.


The guidelines on Know Your Customer/Anti-Money Laundering/Combating Financing of Terrorism guidelines issued by the Reserve Bank of India to banks, from time to time, shall apply mutatis mutandis to all persons issuing pre-paid payment instruments.


All pre-paid payment instruments issued in the country shall have a minimum validity period of six months from the date of activation/issuance to the holder and the maximum value of any pre-paid payment instrument shall not exceed Rs 50,000/-.


RBI/2008-09/458 DPSS.CO.PD.No. 1873 /02.14.06/ 2008-09 dated 27th April, 2009


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