Master Direction on Issuance and Operation of Prepaid Payment Instruments

1. Introduction

1.1 In exercise of the powers conferred under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), the Reserve Bank of India (RBI) being satisfied that it is necessary and expedient in the public interest to do so, hereby, issues these Directions.
 

1.2 Short title and commencement
 

a) These Directions shall be called the Reserve Bank of India (Issuance and Operation of Prepaid Payment Instruments) Directions, 2017 (Master Direction).
b) These Directions shall come into effect from October 11, 2017.
c) Existing authorised Prepaid Payment Instrument (PPI) issuers shall ensure compliance with the revised requirements on or before December 31, 2017, except where timelines have been specified in this Direction.
 

1.3 Applicability: The provisions of the Master Direction shall apply to all PPI Issuers, System Providers and System Participants.
 

1.4 Purpose
 

a) To provide a framework for authorisation, regulation and supervision of entities operating payment systems for issuance of PPIs in the country;
b) To foster competition and encourage innovation in this segment in a prudent manner while taking into account safety and security of transactions as well as systems along with customer protection and convenience.
c) To provide for harmonisation and interoperability of PPIs
 

1.5 For the purpose of these Directions, the term ‘entities’ refers to banks and non-bank entities who have approval / authorisation from the RBI to issue PPIs as well as those who are proposing to issue PPIs.
 

1.6 Banks and non-bank entities have been issuing PPIs in the country after obtaining necessary approval / authorisation from RBI under the Payment and Settlement Systems Act, 2007 (PSS Act). These entities have been operating within the framework of the initial guidelines on “Issuance and Operation of PPIs” issued in April 2009 and the subsequent Master Circulars issued on the subject, as amended from time to time. Taking into account the developments in the field and the progress made by PPI issuers, all existing guidelines issued on the subject till date have been reviewed and are contained in the Master Direction.
 

1.7 The Master Direction lays down the eligibility criteria and the conditions of operation for payment system operators involved in the issuance of semi-closed and open system PPIs in the country. All entities approved / authorised to operate payment systems involving the issuance of PPIs shall comply with these Directions.
 

1.8 No entity can set up and operate payment systems for issuance of PPIs without prior approval / authorisation of RBI.