The Reserve Bank of India (RBI) has changed the norms regarding issuance of prepaid payment instruments by putting a cap of Rs 50,000.
In a statement on Saturday, RBI said, "The developments in the pre-paid payment instrument segment have necessitated a comprehensive review of guidelines issued so far." So, the maximum balance of any such instrument should remain under Rs 50,000, RBI added.
Further, the RBI expressed confidence that the new guidelines will make all issuers follow the money laundering laws and all the relevant KYC norms. It added that the card will not be issued without the verification of the KYC of the issued party.
It also said that the issuer's name should be visible prominently on the payment instrument. Banks/NBFCs/other persons who want to issue such co-branded prepaid instruments must approach RBI to seek one-time approval from the central bank. These norms were last issued by the RBI in April, 2009 under Section 18 of the Payment and Settlement Systems Act of 2007. According to the RBI, the new norms will provide a framework for regulation and supervision of persons operating pre-paid payment systems and also ensure development of this segment in a prudent and customer-friendly manner. Consequently, the definition of pre-paid card will also expand now as it will now include Internet wallets, mobile accounts, mobile wallets, paper vouchers and other instrument which can be used to access the pre-paid amount. At the same time, the apex bank made it clear that mobile based prepaid payment instruments like mobile wallets & mobile accounts should be launched only by those banks which have a licence to provide mobile banking transactions.