RBI’s Special Measures to Promote E-payments/ Digital Payments

Special measures by RBI to incentivise Electronic Payments

The RBI has taken Special measures to incentivise Electronic Payments by way of (i) Enhancement in issuance limits for Pre-Paid Payment Instruments (PPIs) in India and (ii) Special dispensation for small merchants, as under:

RBI Press Release dt. 22 Nov. 2016

To meet transactional needs of public using digital means, RBI has introduced additional measures by way of special dispensation for small merchants and enhancement in limits for semi-closed Prepaid Payment Instruments (PPIs).

RBI has made arrangements/ enabled special dispensation for small merchants whereby PPIs issuers can issue PPIs to such merchants. While balance in such PPIs cannot exceed ₹ 20,000/- at any point of time, the merchants can transfer funds from such PPIs to their own linked bank accounts upto ₹ 50,000/- per month, without any limit per transaction. However, the Merchants shall be required to provide a self-declaration in respect of their status and details of their bank account.

The limit of semi-closed PPIs issued with minimum details has been enhanced to ₹ 20,000/- from the existing ₹ 10,000/-. The total value of reloads during any given month has also been enhanced to ₹ 20,000/-.

Extant instructions for other categories of PPIs remain unchanged. Full KYC PPIs with balance upto ₹ 1,00,000/- can continue to be made available by authorised PPI issuers.

The above measures will be effective from 22Nov. 2016 and will continue till 30 Dec. 2016, subject to review by RBI.

The earlier PPI guidelines did not specifically provide for opening of PPIs for such merchants as a separate category and the limit for semi-closed PPIs issued with minimum details was ₹ 10,000/-.

RBI Notification dt. 22 Nov. 2016

Following the withdrawal of legal tender characteristics of existing ₹ 500/- and ₹ 1000/- Bank Notes (Specified Bank Notes – SBN), in order to facilitate the adoption of digital payments, it has been considered necessary to introduce the following special measures in partial modification of Master Circular DPSS.CO.PD.PPI.No.01/02.14.006/2016-17 dated July 01, 2016 on Issuance and Operation of Pre-paid Payment Instruments in India.

(i) Enhancement in PPI limits:

a) The limit of semi-closed Prepaid Payment Instrument (PPI) that can be issued under Para 7.2 (i) of the Master Circular on issuance and operations of PPIs in India has now been enhanced from ₹ 10,000/- to ₹ 20,000/- .

b) The total value of reloads during any given month shall also not exceed ₹ 20,000/-

c) All other extant instructions in this regard shall remain unchanged.

(ii) Special dispensation for merchants:

As per the extant PPI guidelines, merchants are defined as establishments who accept the PPIs issued by PPI issuer against the sale of goods and services. As a special dispensation for small merchants, PPI issuers can now issue PPIs to such merchants subject to the following:

a) Merchants shall give a self-declaration in respect of their merchant status and details of their own bank account, which shall be kept on record by the issuer.

b) PPIs can be issued to such willing merchants only after due verification and validation of their bank account details.

c) Inflows of funds / credit to such PPIs shall emanate only from sale transactions of the merchant.

d) While there is no minimum balance requirement, the maximum value in these PPIs shall not exceed ₹ 20,000/- at any point of time.

e) Funds transfer from such PPIs are permitted only to the merchant’s own linked bank account and upto an amount of ₹ 50,000/- per month, without any limit per transaction.

f) PPI issuers shall clearly identify such PPIs in their systems for the purpose of maintenance of escrow, reporting and MIS requirements.

2. The above measures shall come into effect from the date of this circular and shall be applicable till December 30, 2016, subject to review.

3. The directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007, (Act 51 of 2007).

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