RBI/2016-2017/16
DPSS.CO.PD.PPI.No.01/02.14.006/2016-17
July
01, 2016
All Prepaid Payment Instrument
Issuers, System Providers, System Participants
and all other Prospective Prepaid Payment Instrument Issuers
Madam / Dear Sir,
Master Circular – Policy
Guidelines on Issuance and Operation of Pre-paid Payment Instruments in India
As you are aware, the Reserve
Bank of India has, from time to time, issued a number of circulars
containing policy guidelines on Issuance and Operation of Pre-paid Payment
Instruments in India. This Master Circular has
been prepared to facilitate the Prepaid Payment Instrument Issuers, System
Providers, System Participants and all other Prospective Prepaid Payment
Instrument Issuers to have all the extant instructions on the subject at
one place.
2. The Master Circular has been
updated by incorporating all the instructions/guidelines issued on Issuance
and Operation of Pre-paid Payment Instruments in India up to July 09, 2015
and has been placed on the RBI web-site (rbi.org.in).
A list of circulars finding reference in this master circular is enclosed
as Appendix.
Yours faithfully,
(Nanda Dave)
Chief General Manager
Contents
Para
No.
|
Subject
|
A.
|
Purpose
|
B.
|
Classification
|
C.
|
Previous Guidelines
Consolidated
|
D.
|
Scope
|
E.
|
Structure
|
1.
|
Introduction
|
2.
|
Definitions
|
3.
|
Eligibility to
issue Prepaid Payment Instruments
|
4.
|
Exemptions
|
5.
|
Capital
requirements
|
6.
|
Safeguards against
money laundering (KYC/AML/CFT) provisions
|
7.
|
Categories of
pre-paid payment instruments
|
8.
|
Deployment of Money
collected
|
9.
|
Issuance and
reloading of pre-paid payment instruments
|
10.
|
Validity
|
11.
|
Transactions Limits
|
12.
|
Redemption
|
13.
|
Fraud prevention
and Security standards
|
14.
|
Customer Protection
Issue
|
|
Format of Quarterly
certificate on balance in Escrow Account by Auditor
|
|
Appendix
|
A. Purpose
To provide a framework for the
regulation and supervision of persons operating payment systems involved in
the issuance of Pre-paid Payment Instruments (PPIs) in the country and to
ensure development of this segment of the payment and settlement systems in
a prudent and customer friendly manner. For the purpose of these
guidelines, the term ‘persons’ refers to ‘entities’ authorized to issue
prepaid payment instruments and ‘entities’ proposing to issue pre-paid
payment instruments.
B. Classification
Statutory Guidelines issued by
Reserve Bank of India under Section 18 read with Section 10(2) of Payment
& Settlement Systems Act, 2007 (Act 51 of 2007).
C. Previous Guidelines
consolidated
The Master Circular compiles the
policy guidelines issued on Issuance and Operation of Pre-paid Payment
Instruments in India as listed in Appendix.
D. Scope
These guidelines lay down the
eligibility criteria and the basic conditions for payment system operators
involved in the issuance of Pre-paid Payment Instruments in the country.
All persons authorised to operate payment systems and involved in the
issuance of Pre-paid Payment Instruments in India shall comply with these
guidelines. All persons proposing to operate payment systems and 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 Systems Act, 2007.
E. Structure
1. Introduction
2. Definitions
3. Eligibility to issue PPI
4. Exemption
5. Capital requirements
6. Safeguards against money laundering (KYC/AML/CFT) provisions
7. Categories of pre-paid payment instruments
8. Deployment of Money collected
9. Issuance and reloading of pre-paid payment instruments
10. Validity
11. Transactions Limits
12. Redemption
13. Fraud prevention and Security standards
14. Customer Protection Issue
1. Introduction
1.1. Consequent to the passing
of Payment and Settlement Systems, Act 2007, banks and non-bank entities
have been issuing pre-paid payment instruments in the country after
obtaining necessary approval / authorisation from Reserve Bank of India and
operating within the guidelines issued by Reserve Bank of India in this
regard. The initial guidelines on “Issuance and Operation of PPIs” issued
in April 2009 have been amended from time to time, taking into account the
developments in the field and the progress made by PPI issuers. Given the
number of amendments made in the past, it has become necessary to have all
the instructions at one place.
1.2 Further, in view of the
references received from PPI issuers on certain issues pertaining to the
operations of PPIs, a comprehensive review of extant guidelines and instructions
has also been carried out, in consultation with the stakeholders. These
guidelines, covering both banks and non-bank persons, lay down the basic
eligibility criteria and the conditions for operations such payment systems
in the country.
2. Definitions
2.1 Issuer:
Persons operating the payment systems issuing pre-paid payment instruments
to individuals/organizations. The money so collected is used by these
persons to make payment to the merchants who are part of the acceptance
arrangement directly, or through a settlement arrangement.
2.2 Holder:
Individuals/Organizations who acquire pre-paid payment instruments for
purchase of goods and services, including financial services.
2.3 Pre-paid Payment Instruments: Pre-paid payment instruments are payment instruments
that facilitate purchase of goods and services, including funds transfer,
against the value stored on such instruments. The value stored on such
instruments represents the value paid for by the holders 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
instrument which can be used to access the pre-paid amount (collectively
called Prepaid Payment Instruments hereafter). The pre-paid payment
instruments that can be issued in the country are classified under three
categories viz. (i) Closed system payment instruments (ii) Semi-closed
system payment instruments and (iii) Open system payment instruments.
2.4 Closed System Payment Instruments: These are payment instruments issued by a person for
facilitating the purchase of goods and services from him/it. These
instruments do not permit cash withdrawal or redemption. As these
instruments do not facilitate payments and settlement for third party
services, issue and operation of such instruments are not classified as
payment systems.
2.5 Semi-Closed System Payment Instruments: These are payment instruments which can be used
for purchase of goods and services, including financial services at a group
of clearly identified merchant locations/ establishments which have a
specific contract with the issuer to accept the payment instruments. These
instruments do not permit cash withdrawal or redemption by the holder.
2.6 Open System Payment Instruments: These are payment instruments which can be used
for purchase of goods and services, including financial services like funds
transfer at any card accepting merchant locations (point of sale terminals)
and also permit cash withdrawal at ATMs / BCs.
2.7 Limits: All
‘limits’ in the value of instruments stated in the guidelines, indicate the
maximum value of such instruments that can be issued to any holder.
2.8 Merchants:
The establishments who accept the PPIs issued by PPI issuer against the
sale of goods and services.
3. Eligibility to issue Prepaid
Payment Instruments (PPI)
3.1 Banks who comply with the
eligibility criteria would be permitted to issue all categories of pre-paid
payment instruments.
3.2 However, only those 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).
3.3 Non-Banking Financial
Companies (NBFCs) and other persons would be permitted to issue only closed
and semi-closed system payment instruments, including mobile phone based
pre-paid payment instruments.
4. Exemption
4.1 Foreign Exchange Pre-paid Payment Instruments: Persons authorized under Foreign Exchange
Management Act (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. The use of such payment instruments shall
be limited to permissible current account transactions and subject to the
prescribed limits under the Foreign Exchange Management (Current Account
Transactions) Rules, 2000, as amended from time to time.
5. Capital Requirements
5.1 Banks and Non-Banking
Financial Companies which comply with the Capital Adequacy requirements
prescribed by Reserve Bank of India from time-to-time, shall be permitted
to issue pre-paid payment instruments.
5.2 All other persons, seeking
authorisation henceforth, shall have a minimum paid-up capital of Rs. 500
lakh and minimum positive net worth of Rs. 100 lakh at all the times.
Necessary instructions, if any, for the existing PPI issuers for compliance
of enhanced capital requirements will be notified separately.
5.3 Applicant companies having
FDI/FII should meet the minimum capital requirement as applicable under
Consolidated FDI policy guidelines of Government of India.
5.4 Only companies incorporated
in India will be eligible to apply for authorisation.
6. Safeguards against Money
Laundering (KYC/AML/CFT) Provisions
6.1 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 the persons issuing pre-paid payment
instruments.
6.2 As PPI issuers are operating
a Payment System, provisions of Prevention of Money Laundering Act, 2002
and Rules framed thereunder, as amended from time to time, are also
applicable to PPI issuers. Necessary systems shall be put in place to
ensure compliance with these guidelines.
6.3 The use of pre-paid payment
instruments for cross border transactions shall not be permitted except for
the payment instruments provided at paragraph 4.1 of the guidelines.
6.4 Persons issuing pre-paid
payment instruments shall maintain a log of all the transactions undertaken
using these instruments. This data should be available for scrutiny by the
Reserve Bank or any other agency / agencies as may be advised by the
Reserve Bank. These persons shall also file Suspicious Transaction Report
(STR) to Financial Intelligence Unit – India (FIU-IND).
7. Categories of Pre-paid
Payment Instruments
7.1 The maximum value of any
pre-paid payment instruments (where specific limits have not been
prescribed including the amount transferred as per paragraph 10.2) shall
not exceed Rs 50,000/-.
7.2 The following types
of semi closed pre-paid payment instruments can be issued on
carrying out Customer Due Diligence as detailed:-
i.
upto
Rs.10,000/- by accepting minimum details of the customer provided the
amount outstanding at any point of time does not exceed Rs. 10,000/- and
the total value of reloads during any given month also does not exceed Rs.
10,000/-. These can be issued only in electronic form;
ii.
from
Rs.10,001/- to Rs.50,000/- by accepting any ‘officially valid document’
defined under Rule 2(d) of the PML Rules 2005, as amended from time to
time. Such PPIs can be issued only in electronic form and should be
non-reloadable in nature;
iii.
upto
Rs.1,00,000/- with full KYC and can be reloadable in nature. The balance in
the PPI should not exceed Rs.1,00,000/- at any point of time.
7.3 Banks can issue open
pre-paid payment instrument after full KYC in addition to semi closed PPIs
listed above.
7.4 Co-branded pre-paid
payment instrument
All persons authorized /
approved to issue pre-paid payment instruments are permitted to co-brand
such instruments with the name/logos of financial institution / Government
Organisation etc. for whose customers/beneficiaries such co-branded
instruments are issued. The name of the issuer shall be visible prominently
on the payment instrument. NBFCs/Other persons desirous of issuing such
co-branded prepaid instruments may seek one time approval from Reserve Bank
of India.
However, banks have been granted
general permission to issue rupee denominated co-branded prepaid
instruments subject to the terms and conditions as mentioned in the circular RBI/2012-13/325
DBOD.No.FSD.BC.67/24.01.019/2012-13 dated December 12, 2012.
7.5 Prepaid Gift
instrument issuance by Banks, NBFCs and other persons
Banks, NBFCs and other persons
are permitted to issue pre-paid gift instruments subject to the following
conditions:
a.
The
maximum validity of the pre-paid gift instruments shall be three years.
b.
Maximum
value of each such payment instrument shall not exceed Rs. 50,000/-.
c.
These
instruments shall not be reloadable.
d.
Cash
withdrawal shall not be permitted for such instruments.
e.
Full
KYC of the purchasers of such instruments shall be maintained. (Separate
KYC would not be required in cases of customers who are issued such
instruments against debit to their bank accounts in India which are fully
KYC compliant).
f.
The issuer
shall maintain the details of the persons to whom such instruments have
been issued and make available the same on demand. The issuer shall also
ensure that full details of the ultimate beneficiary are obtained for
furnishing to the regulator or Government, as and when requested.
g.
Entities
may adopt a risk based approach, duly approved by their Board, in deciding
the number of such instruments which can be issued to a customer,
transaction limits etc.
7.6 Pre-paid Instruments
issued by banks to Government Organizations for onward issuance to the
beneficiaries of Government sponsored schemes.
Banks are permitted to issue
pre-paid instruments to Government Organisations for onward issuance to the
beneficiaries of Government sponsored schemes, subject to the following
conditions:-
a.
Verification
of the identity of the beneficiaries shall be the responsibility of the
Government Organisations.
b.
These
payment instruments shall be loaded / reloaded only by debit to a bank
account, maintained by the Government Organizations with the same bank.
c.
The
maximum value of each such payment instrument shall not exceed Rs.
50,000/-.
d.
Banks
shall facilitate transfer of funds from such payment instruments to a
regular bank account of the beneficiary, if requested for.
e.
The
banks shall be responsible for all customer service aspects related to
these instruments.
7.7 Pre-paid Instruments
issued by banks to other Financial Institutions for credit of
one-time/periodic payments by these organisations to their customers.
Banks are permitted to issue
prepaid instruments to other financial institutions for credit of
one-time/periodic payments by these organisations to their customers
subject to the following conditions:-
a.
Banks
shall satisfy themselves about the adequacy of the KYC practices followed
by these organisations before issuance of these instruments.
b.
These
payment instruments shall be loaded / reloaded only by debit to a bank
account, maintained by the financial institutions with the same bank.
c.
The
maximum value of such payment instrument shall not exceed Rs. 50,000/-.
d.
Banks
shall facilitate transfer of funds from such payment instruments to a
regular bank account of the beneficiary, if asked for.
e.
The
banks shall be responsible for all customer service aspects related to
these instruments.
7.8 Prepaid Instruments
issued by banks for credit of cross border inward remittance.
Banks are permitted to issue
prepaid instruments to principal agents approved under the Money Transfer
Service Scheme (MTSS) of the Reserve Bank of India or directly to the
beneficiary under the scheme for loading of the funds from inward
remittances, subject to the following conditions:-
a.
Banks
shall ensure proper identity of the beneficiaries while directly issuing
such prepaid payment instruments to them.
b.
Banks
shall satisfy themselves about the systems followed by the agents for
identifying the beneficiaries, before issuance of these instruments.
c.
The
card shall be loaded only with the remittance proceeds received under the
MTSS guidelines.
d.
The
maximum value of such payment instrument shall not exceed Rs. 50,000/-.
e.
Splitting
of single credits among different modes of payment shall not be permitted.
Any amount received in excess of Rs. 50,000/- under MTSS should be paid by
credit to a bank account.
f.
Banks
shall facilitate transfer of funds from such payment instruments to a
regular bank account of the beneficiary, if asked for.
g.
The
banks shall be responsible for all customer service aspects related to
these instruments.
7.9 Pre-paid Instruments
issued by banks to Corporates for onward issuance to their employees
Banks are permitted to issue
prepaid instruments to corporates for onward issuance to their employees
subject to the following conditions:-
a.
Prepaid
payment instruments can be issued only to corporate entities listed in any
of the stock exchanges in India.
b.
Verification
of the identity of the employee shall be the responsibility of the
concerned corporate. The bank should put in place proper systems to capture
and maintain details of the employees to whom the cards are issued by the
corporate along with copies of photograph and identity proof of such
employees. The corporate is also required to make available details of bank
accounts (if any) of the employees to the bank.
c.
Banks
may ensure that the list of authorized signatories approved by the Board of
the corporate entity is taken on record and requests from such authorized
persons are only accepted for the purpose of loading/activating the prepaid
payment instruments.
d.
These
prepaid payment instruments shall be loaded / reloaded only by debit to the
bank account, which are subject to full KYC, maintained by the corporate
with the same bank.
e.
The
maximum value outstanding on individual prepaid payment instruments at any
point of time shall not exceed Rs. 50,000/-.
f.
Banks
shall facilitate transfer of funds from such prepaid payment instruments to
a regular bank account of the concerned employee, if requested for.
g.
The
banks shall be responsible for all customer service aspects related to
these instruments.
7.10 Issue of multiple
PPIs by banks from fully-KYC compliant bank accounts for dependents /
family members
Banks are permitted to issue
prepaid payment instrument subject to following conditions:
a.
Such
PPIs may be issued only by loading the value from fully KYC-compliant bank
account of the purchasers. Beneficiary has to be a dependent / family
member.
b.
The
account holders purchasing the PPIs need to provide the minimum details
(such as name, address and contact details) of the intended beneficiary/ies
who are his/her dependents and family members.
c.
Only
one card can be issued to one beneficiary.
d.
The
transaction and monthly limits as applicable for cash pay-out arrangements
under DMT guidelines issued from time to time (currently Rs 10,000/- per
transaction with a monthly ceiling of Rs 25,000/-) will be applicable for
such PPIs.
e.
The
bank may put in place mechanisms to monitor and report suspicious
transactions on these PPIs to Financial Intelligence Unit India (FIU IND).
f.
The
other guidelines as applicable to open system PPIs will also be applicable
to these cards.
g.
Such
PPIs shall be issued only in electronic form.
7.11 Rupee denominated
PPIs issued by banks for visiting foreign nationals and NRIs
Banks are permitted to issue
rupee denominated non-reloadable (a) PPIs to NRIs and foreign nationals
visiting India & (b) PPIs co-branded with exchange houses/money
transmitters (approved by RBI) to NRIs and foreign nationals visiting
India subject to the following conditions:
a.
The
cards can be issued by overseas branches of banks in India directly or by
cobranding with the exchange houses/money transmitters upto a maximum
amount of Rs.2 lakhs by loading from a KYC compliant bank account.
b.
Such
PPIs should be activated by the bank only after the traveller arrives in
India.
c.
Cash
withdrawal from such PPIs will be restricted to Rs 50,000/- per month.
d.
The
cards should be issued strictly for use in India and transactions settled
in INR.
e.
The
banks should ensure compliance to relevant KYC/AML/CFT requirements issued
from time to time.
f.
An
individual can hold only one card at a time and the card should be non-
transferable. The issuing bank has to put in place necessary arrangements
to ensure the same.
g.
These
PPIs may be used only for transactions permissible under the extant foreign
exchange regulations.
h.
Transaction
history have to be maintained by the banks.
i.
The
process put in place by the bank for refund of unutilised portion of the
PPI amount in India has to adhere to the extant foreign exchange
regulations.
j.
Such
PPIs shall be issued only in electronic form.
7.12 PPI for Mass
Transit Systems (PPI-MTS)
In the process of moving from
cash based payments to electronic payments to achieve the vision of
less-cash society, a new category of semi-closed Prepaid Payment
Instruments (PPI) is being introduced with the following features:
i.
The
semi-closed PPIs will be issued by the mass transit system operator
(PPI-MTS) after authorisation under the Payment and Settlement Systems Act,
2007 to issue and operate such semi-closed PPIs;
ii.
The
PPI-MTS will necessarily contain the Automated Fare Collection application
related to the transit service to qualify as PPI-MTS;
iii.
Apart
from the mass transit system, such PPI-MTS can be used only at other
merchants whose activities are allied to or are carried on within the
premises of the transit system ;
iv.
The
PPI-MTS issuer will ensure on-boarding of merchants (only those permissible
as under (iii) above) following due procedure applicable to any other PPI
issuer;
v.
The
PPI-MTS will have minimum validity of six months from the date of issue;
vi.
The
issuer may decide upon the desired level of KYC, if any, for such PPIs;
vii.
The
PPI-MTS issued may be reloadable in nature and at no point of time the
value / balance in PPI can exceed the limit of Rs. 2,000/- (Rupees Two
Thousand Only);
viii.
No
cash-out or refund will be permitted from these PPIs;
ix.
Funds
transfer under the Domestic Money Transfer (DMT) guidelines will also not
be applicable to these PPIs;
x.
All
other extant guidelines for escrow arrangement, customer grievance
redressal mechanism, agent / merchant due diligence, reporting and MIS
requirements etc. applicable to issue of PPIs would continue to be
applicable in respect of PPI-MTS.
8. Deployment of Money Collected
8.1 The money collected against
issuance of pre-paid payment instruments at a point of time could be
substantial. Further, the turnover of funds may also be rapid. The
confidence of public and merchant establishments on pre-paid instruments
schemes depends on certainty and timeliness of settlement of claims arising
from use of such instruments. To ensure timely settlement, the issuers
shall invest the funds collected only as provided here-in.
8.2 For the schemes operated by
banks, the outstanding balance shall be part of the ‘net demand and time
liabilities’ for the purpose of maintenance of reserve requirements. This
position will be computed on the basis of the balances appearing in the
books of the bank as on the date of reporting.
8.3 Other non-bank persons
issuing payment instruments are required to maintain their outstanding
balance in an escrow account with any scheduled commercial bank subject to
the following conditions:-
i.
The escrow
balance must be necessarily maintained with only one scheduled commercial
bank at any point of time.
ii.
In
case there is a need to shift the escrow account from one bank to another,
same may be effected in a time-bound manner without unduly impacting the
payment cycle to the merchants. The migration should be completed in the
minimum possible time and with the prior approval of RBI.
iii.
The
balance in the escrow account should, at no time, be lower than the value
of outstanding PPIs and payments due to merchants. While as far as possible
PPI issuers should ensure immediate credit of funds to escrow on sale /
reload of PPIs to end-users, such credit to escrow account should not be
later than the close of business day (on which the PPI has been sold /
reloaded) under any circumstances.
iv.
The
amount so maintained in the escrow account shall be used only for making
payments to the participating merchant establishments and other permitted
payments. Following debits and credits will only be permitted from the
escrow account:
Credits
a.
Payments
received towards sale / reload of PPIs, including at agent locations
b.
Refunds
received for failed / disputed / returned / cancelled transactions.
Debits
c.
Payments
to various merchants/service providers towards reimbursement of claims received
from them
d.
Payment
to sponsor bank for processing funds transfer instructions received from
PPI holders as permitted by RBI from time to time.
e.
Payment
towards applicable Government taxes (received along with PPI sale/reload
amount from the buyers)
f.
Refunds
towards cancellation of transactions in a PPI in case of PPIs loaded /
reloaded erroneously or through fraudulent means (on establishment of
erroneous transfer /fraud). The funds have to be credited back to the same
source from where these were received. These funds are not to be forfeited
till the disposal of the case.
g.
Any
other payment due to the PPI issuer in the normal course of operating the
PPI business (for instance, service charges, forfeited amount, commissions)
h.
Any
other debit as directed by the regulator / courts / law enforcement
agencies.
Note: (1) The payment towards service charges, commission
and forfeited amount shall be at pre-determined rates/frequency. Such
transfers shall only be effected to a designated bank account of the PPI issuer
as indicated in the agreement with the bank where escrow account is
maintained. (2) All these provisions should be part of Service Level
Agreement that will be signed between the PPI issuer and the bank
maintaining escrow account.
(v) PPI issuer will be required
to submit the list of merchants acquired by it to the bank and update the
same from time to time. The bank will be required to ensure that payments
are to be made only to eligible merchants / purposes. There should be an
exclusive clause in the agreement signed between the PPI issuer and bank
maintaining escrow account towards usage of balance in escrow account only
for the purposes mentioned above.
(vi) Further, there should also
be an exclusive clause in the agreement signed/to be signed between the
issuer/operator and the bank maintaining ‘escrow account’, which would
enable the bank to use the money in the 'escrow account' only for making
payment to the merchants/holders in preference to the other creditors in
the event of liquidation/bankruptcy of the issuer. Accordingly, all the
banks are advised to add the following paragraph in the agreement entered
into with the issuer/operator of prepaid payment instruments for operating
escrow account:
"It is expressly agreed and
confirmed that the amount lying in the escrow account is charged unto the
holders of the prepaid payment instruments and the merchant establishments
to pay the dues arising out of usage of the prepaid payment instruments or
otherwise. Provided further, that the amount in the escrow account shall be
deemed to be a security charged unto the participating merchant
establishments or holders of the prepaid payment instruments issued by the
issuer and to be utilised to redeem the dues arising out of usage of the
said prepaid payment instruments in the first instance or otherwise to be
paid to the holders of the same on surrender of the instrument and
settlement of the dues in the event of the scheme being wound up or being
directed by the Reserve Bank of India to be discontinued, as provided for
in the operative guidelines issued by the Reserve Bank on April 27, 2009 on
Issuance and Operation of Pre-paid Payment Instruments, as amended from
time to time."
(vii) Banks maintaining the
escrow account as above are, therefore, advised to necessarily record the
charge of the holders of the pre-paid payment instruments and/or the
merchant establishments with the Registrar of Companies under Section 125
of the Companies Act, 1956.
(viii) A certificate, as
prescribed by the Bank from time to time is required to be submitted by the
authorised entities, signed by the auditor(s), on a quarterly basis. Such
certificate shall be submitted certifying that the person has been
maintaining adequate balance in the account to cover the outstanding value
of pre-paid payment instruments issued. The certificates shall be submitted
within a fortnight from the end of the quarter to which it pertains. Format
of the certificate is attached.
(ix) The person shall also
submit an annual certificate, as above, coinciding with the accounting year
of the entity to the Reserve Bank of India.
(x) Adequate records indicating
the daily position of the value of instruments outstanding vis-à-vis
balances maintained with the banks in the escrow accounts shall be made
available for scrutiny to the Reserve Bank or the bank where the account is
maintained on demand.
(xi) Settlement of funds with
merchants should not be co-mingled with other business handled, if any by
the PPI issuer.
(xii) NO interest
is payable by the bank on such balances.
8.4 As an exception to the above
(8.3 xii), the entity can enter into an agreement with the bank where
escrow account is maintained, to transfer "core portion" of the
amount, in the escrow account to a separate account on which interest is
payable, subject to the following:-
i) The bank shall satisfy itself
that the amount deposited represents the "core portion" after due
verification of necessary documents.
ii) The amount shall be linked
to the escrow account, i.e. the amounts held in the interest bearing
account shall be available to the bank, to meet payment requirements of the
entity, in case of any shortfall in the escrow account.
iii) This facility is
permissible to persons who have been in business for at least ONE YEAR and
whose accounts have been duly audited for the full accounting year.
iv) NO LOAN is permissible
against such deposits. Banks shall not issue any deposit receipts or mark
any lien on the amount held in such form of deposits.
v) Core portion as calculated
above will remain linked to the escrow account. The escrow balance and core
portion maintained should be clearly disclosed in the Auditors certificates
submitted to Reserve Bank of India on quarterly and annual basis.
Note: For the purpose of these guidelines "Core
Portion" may be computed as under:-
Step 1: Compute lowest daily
outstanding balance (LB) on a fortnightly (FN) basis, for one year (26
fortnights) from the preceding month.
Step 2: Calculate the average of
the lowest fortnightly outstanding balances [(LB1 of FN1+ LB2 of FN2+
........+ LB26 of FN26) divided by26].
Step 3: The average balance so
computed represents the "Core Portion" eligible to earn interest.
9. Issuance and reloading of
Pre-paid Payment Instruments
9.1 All persons authorised to
issue pre-paid payment instruments by Reserve Bank of India are permitted
to issue reloadable or non-reloadable pre-paid payment instruments
depending upon the permissible category of PPIs.
9.2 Banks are permitted to issue
and reload such payment instruments at their branches and ATMs against
payment by cash/debit to bank account/credit card and through their
business correspondents appointed as per the guidelines issued by the
Reserve Bank in this regard. Banks are also permitted to issue and reload
semi-closed prepaid payment Instruments through agents (other than BCs) by
payment by cash/debit to bank account /credit card subject to the following
conditions:-
i) The issuer may carry out
proper due diligence of the persons before appointing them as agents for
sale of such instruments.
ii) The issuer shall be
responsible for all their payment instruments issued by their agents.
iii) The pre-paid payment
instrument issuers shall be responsible as the principal for all the acts
of omission or commission of their agents.
9.3 Other persons shall be
permitted to issue and reload such payment instruments through their
authorised outlets or through their agents by payment by cash/debit to bank
account /credit card subject to the following conditions:-
i) The issuer may carry out
proper due diligence of the persons appointed as authorized agents for sale
of such instruments.
ii) The issuer shall be
responsible for all their payment instruments issued by the appointed
agents.
iii) The pre-paid payment
instrument issuers shall be responsible as the principal for all the acts
of omission or commission of their agents.
10. Validity
10.1 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.
10.2 In the case of
non-reloadable pre-paid payment instruments, the transfer of outstanding
amount at the expiry of the payment instrument to a new similar payment
instrument of the same issuer, purchased by the holder may be permitted.
10.3 PPI issuers shall caution
the PPI holder at reasonable intervals, during the 30 days’ period prior to
expiry of validity period of PPI, before forfeiting outstanding balances in
the PPI, if any. The caution advice shall be sent by SMS / e-mail / post or
by any other means in the language preferred by the holder indicated at the
time of on-boarding the customer (sale of PPI). Further, the information
about expiry period as well as forfeiture policy should be made known to the
customer at the time of sale / reload of the PPI, and should be clearly
enunciated in the terms and conditions of sale of PPI. Where applicable, it
should also be clearly outlined on the website of the issuer.
11. Transactions Limits
11.1 There is no separate limit
on purchase of goods and services using PPIs and the holder is allowed to
use the PPI for these purposes within the overall PPI limit applicable.
11.2 Transaction limits and
monthly caps are, however, applicable on funds transfers permitted in PPIs
under Domestic Money Transfer (DMT) Guidelines. PPI issuers should ensure
that all incoming funds to a PPI under DMT are within the overall
permissible limits for that category of PPI.
11.3 Refunds in case of failed /
returned / rejected / cancelled transactions may be applied to the
respective PPI account immediately even if such application of funds
results in exceeding the limits prescribed for that category of PPI.
However, PPI issuers will be required to maintain complete details of such
returns / refunds etc. and be in readiness to provide them as and when
called for. Further, PPIs issuers will be required to put in place
necessary systems that enable them to monitor frequent instances of refunds
taking in place in specific accounts and if necessary / called for be in a
position to substantiate with proof for audit purposes to the regulator.
11.4 In the case of open system
prepaid payment instruments issued by banks in India, cash withdrawal at
POS is permitted upto a limit of Rs.1000/- per day subject to the same
conditions as applicable hitherto to debit cards (for cash withdrawal at
POS).
12. Redemption
12.1 The issuer of such
instruments shall not dishonour customer instructions for payments/transfer
of money, at approved locations, if there is sufficient balance outstanding
against the instrument.
12.2 The holders of pre-paid
payment instrument shall be permitted to redeem the balance outstanding
within the expiry date, if for any reason the scheme is being wound-up or
is directed by the Reserve Bank to be discontinued.
12.3 Where redemption is
provided as at 10.2 above, the redemption value shall not be in excess of
the amount outstanding or the face value (loading limit) of the instrument.
13. Fraud prevention and
security standards
13.1 The pre-paid payment
instrument issuers shall put in place adequate information and data
security infrastructure and systems for prevention and detection of frauds.
It is necessary to have a centralized database/ MIS by the issuer to
prevent multiple purchase of payment instruments at different locations,
leading to circumvention of limits, if any, prescribed for such payment
instruments.
14. Customer Protection Issue
14.1 All pre-paid payment
instrument issuers shall disclose all important terms and conditions in
clear and simple language (preferably in English, Hindi and the local
language) comprehensible to the holders while issuing the instruments.
These disclosures shall include:
i) All charges and fees
associated with the use of the instrument.
ii) The expiry period and the
terms and conditions pertaining to expiration of the instrument.
iii) The customer service
telephone numbers and website URL.
14.2 The non-bank PPI issuer
shall put in place an effective mechanism for redressal of customer
complaints along with escalation matrix and publicise the same for the
benefit of customers. Besides reporting of customer complaints in the
format and frequency as already mandated, PPI issuers are also required to
report frauds, if any, involving the PPIs issued by them on a quarterly
basis (or earlier). Instances of fraud along with the modus-operandi
adopted by the perpetrators, if known and analysed, may be reported
separately.
14.3 In case of pre-paid payment
instruments issued by banks, customers shall have recourse to Banking
Ombudsman Scheme for grievance redressal.
Quarterly
certificate on balance in Escrow Account by Auditor
Sl.
No.
|
Items
|
Comments from the Auditor’s
|
1.
|
Name & Address of the
entity
|
|
2.
|
Name & Address of the
auditor
|
|
3.
|
Escrow Bank details like
|
Name of the Bank
Branch Address
Account No. etc.
|
|
4.
|
Outstanding Liability of the
entity at the beginning of the quarter
|
Rs.
|
5.
|
Debits to Escrow account
during the quarter
|
|
i. Payments to various
merchants/service providers towards reimbursement of claims received from
them
j. Payment to sponsor bank for
processing funds transfer instructions received from PPI holders as permitted
by RBI from time to time.
k. Payment towards applicable
Government taxes
l. Refunds towards
cancellation of transactions in a PPI in case of PPIs loaded / reloaded
erroneously or through fraudulent means.
m. Any other payment due to
the PPI issuer in the normal course of operating the PPI business (for
instance, service charges, forfeited amount, commissions etc.)
n. Any other debit as directed
by the regulator / courts / law enforcement agencies.
|
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
|
6.
|
Credits to Escrow account
during the quarter
|
|
a. Payments received towards
sale / reload of PPIs, including at agent locations
b. Refunds received for failed
/ disputed / returned / cancelled transactions.
|
Rs.
Rs.
|
7.
|
Escrow balance at the end of
the quarter
|
|
8.
|
Whether the escrow account had
sufficient balance to cover the outstanding liability of the entity on
daily basis?
If No, (i) number of days of
shortfall in balance
(ii) Amount short in escrow account
|
|
9.
|
(i) Minimum balance in escrow
account during the quarter (including core portion)
(ii) Maximum balance in the
escrow account during the quarter (including core portion)
|
|
10.
|
Whether the Core portion of
the escrow balance is being maintained with the same bank.
|
|
11.
|
Quarterly Average of Core
balance.
|
|
12.
|
Whether interest is being
earned by the entity on the core balance.
|
|
13.
|
Number of merchants registered
for payments
i.
At
the beginning of quarter
ii.
At
the end of quarter
|
|
|
|
|
|
Other information: Average time
taken for payments to merchants
Share of Funds transfer in total
payments made
Appendix
List
of Circulars consolidated for the Master Circular
Sr.
No.
|
Circular
No.
|
Date
|
Subject
|
1.
|
DPSS.CO.PD.No.1873/02.14.06/
2008-09
|
27.04.2009
|
Policy Guidelines for issuance
and operation of Prepaid payment Instruments in India
|
2.
|
DPSS.CO.PD.No.344/02.14.06/2009-10
|
14.08.2009
|
Policy Guidelines for issuance
and operation of Prepaid payment Instruments in India
|
3.
|
DPSS.CO.No.1041/02.14.006/2010-2011
|
04.11.2010
|
Policy Guidelines for issuance
and operation of Prepaid payment Instruments in India
|
4.
|
DPSS
No.2174/02.14.004/2010-2011
|
23.03.2011
|
Policy Guidelines for issuance
and operation of Prepaid payment Instruments in India
|
5.
|
DPSS.CO.No.2501/02.14.06/2010-11
|
04.05.2011
|
Policy Guidelines for issuance
and operation of Prepaid payment Instruments in India
|
6.
|
DPSS.CO.PD.No.225/02.14.006/2011-12
|
04.08.2011
|
Policy Guidelines for issuance
and operation of Prepaid payment Instruments in India
|
7.
|
DPSS.PD.CO.No.62/02.27.019/2011-2012
|
05.10.2011
|
Domestic Money Transfer-
Relaxations
|
8.
|
DPSS.CO.PD.No.2256/02.14.006/2011-12
|
14.06.2012
|
Policy Guidelines for issuance
and operation of Prepaid payment Instruments in India
|
9.
|
DPSS.CO.PD.No.560/02.14.006/2012-13
|
01.10.2012
|
Policy Guidelines for issuance
and operation of Prepaid payment Instruments in India
|
10.
|
DPSS.CO.PD.No.563/02.14.003/2013-14
|
05.09.2013
|
Cash withdrawal at Point of
Sale (POS) - Prepaid Payment Instruments issued by banks
|
11.
|
DPSS.CO.PD.No.2074/02.14.006/2013-14
|
28.03.2014
|
Pre-paid Payment Instruments
in India – Consolidated Revised Policy Guidelines
|
12.
|
DPSS.CO.PD.No.2366/02.14.006/2013-14
|
13.05.2014
|
Pre-paid Payment Instruments
in India – Consolidated Revised Policy Guidelines
|
13
|
DPSS.CO.PD.No.980/02.14.006/2013-14
|
03.12.2014
|
Issuance and operation of
Prepaid payment instruments (PPIs) in India-Relaxations
|
14
|
DPSS.CO.PD.No.58/02.14.006/2015-2016
|
09.07.2015
|
Issuance and operation of
Prepaid payment instruments (PPIs) in India- Introduction of New Category
of PPI for Mass Transit Systems (PPI-MTS)
|
|