- Date : 10/12/2019
- Read: 3 mins
The prepaid amount can only be used to pay for goods and services or make bill payments. Read more about this.

The Reserve Bank of India has proposed a new type of Prepaid Payment Instrument (PPI) only for making digital payments such as paying for utility bills or paying merchants. The upper limit for these PPIs will be Rs 10,000 per month. This was revealed in RBI’s statement on Development and Regulatory policies.
What did the statement say?
The statement said, “Prepaid Payment Instruments (PPIs) have been playing an important role in promoting digital payments. To further facilitate its usage, it is proposed to introduce a new type of PPI which can be used only for the purchase of goods and services up to a limit of Rs 10,000. The loading/reloading of such PPI will be only from a bank account and used for making only digital payments such as bill payments, merchant payments, etc. Such PPIs can be issued on the basis of essential minimum details sourced from the customer.”
A PPI is essentially a digital tool that can be used to pay for goods and services or to transfer money among friends and family. Mobile wallets such as Paytm, Mobikwik, and Amazon Pay are all example of PPI. Plastic cards such as debit, credit also fall under this category.
Related: 42% of Indian consumers prefer digital payments: Survey
What will the features of these PPI entail?
- Banks and NBFCs are allowed to issue these semi-closed PPIs.
- They can do so after obtaining the minimum details of the customers.
- The upper recharge and spend limit will be Rs 10000 per month.
- The total amount loaded in a financial year should not exceed Rs 1 lakh.
- Minimum details that customers will need to furbish include mobile number validated by OTP, proofs such as PAN card, Aadhaar card or any other officially valid document as per Rule 2(d) of the PML Rules 2005.
- The PPI can only be used for the purchase of goods and services or to pay bills.
- The PPI can only be recharged from a bank account.
- Transfer of funds from PPI to a bank account or to other PPIs will not be allowed.
- Banks and NBFCs have to ensure that this type of PPI is not issued to the same user again in the future with the same mobile number and proof documents.
- These PPIs will have to be converted from minimum KYC details to full KYC compliant within 24 months.
- Failing to do so will result into stoppage of further credit into the PPI. The customer will, however, be allowed to use the existing balance.
- PPI issuers will give an option to their customers to close the PPI at any time. In such a scenario, an existing balance shall be transferred to the customer’s own bank account or source of the fund at their request.
How smart are you with digital payments? Take this quiz and find out.