RBI/DPSS/2016-17/53
DPSS.CO.PD. No. /02.14.006/2016-17
March
20, 2017
All Prepaid Payment Instrument
Issuers, System Providers, System Participants
and all prospective Prepaid Payment Instrument Issuers
(Draft
Master Directions for Comments)
Dear Sir/ Madam,
Master Directions on Issuance
and Operation of Prepaid 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 Prepaid Payment
Instruments (PPIs) in India. These Master Directions have 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 Directions have
been prepared by incorporating all the instructions/guidelines issued on
Issuance and Operation of Prepaid Payment Instruments in India up to
February 28, 2017 along with certain revisions and additions to the extant
instructions. The Master Directions, issued under Section 18 read with
Section 10(2) of Payment and Settlement Systems Act, 2007, has been placed
on the RBI web-site (rbi.org.in). A list of circulars finding reference in these
Master Directions is enclosed as Appendix.
Yours faithfully,
(Nanda S. Dave)
Chief General Manager-in-Charge
1. Introduction
1.1 In exercise of the powers
conferred under Section 18 read with Section 10(2) of Payment and
Settlement Systems Act, 2007 (Act 51 of 2007) the Reserve Bank of India
being satisfied that it is necessary and expedient in the public interest
so to do, hereby, issues the directions hereinafter specified.
1.2 Short title and
commencement
i.
These
directions shall be called the Reserve Bank of India (Issuance and
Operation of Prepaid Payment Instruments in India) Directions 2017 (Master
Directions).
ii.
These
directions shall come into effect on the day they are placed on the
official website of the Reserve Bank of India (RBI).
1.3 Applicability:
The provisions of the Master Directions shall apply to all Prepaid Payment
Instrument Issuers, System Providers, System Participants and all
prospective Prepaid Payment Instrument Issuers
1.4 Purpose
i.
To
provide a framework for regulation, authorisation and supervision of
entities operating payment systems for issuance of Prepaid Payment
Instruments (PPIs) in the country;
ii.
To
encourage innovation in this segment in a prudent manner taking into account
safety and security along with customer protection and convenience.
1.5 For the purpose of these
guidelines, the term ‘entities’ refers to banks, NBFCs and other non-bank
entities who have approval / authorisation, as the case may be, for setting
up and operating systems for issuance of PPIs.
1.6 Banks and non-bank entities
have been issuing prepaid payment instruments (PPIs) in the country after
obtaining necessary approval / authorisation under the Payment and
Settlement Systems Act, 2007 from Reserve Bank of India. These entities
have been operating within the framework of the initial guidelines on
“Issuance and Operation of PPIs” issued in April 2009 and amended from time
to time. Taking into account the developments in the field and the progress
made by PPI issuers, and given the number of amendments made in the past,
these guidelines are now being issued in the form of Master Directions
containing all the instructions at one place.
1.7 The Master Directions
incorporate all the instructions/guidelines issued on Issuance and
Operation of Prepaid Payment Instruments in India up to February 28, 2017
along with certain revisions and additions to the extant instructions.
1.8 The Master Directions,
covering both banks and non-bank entities, lay down the eligibility
criteria and the conditions of operations 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 in India shall comply with these directions.
1.9 All bank and non-bank
entities proposing to set up and operate payment systems for issuance of
PPIs shall seek approval / authorization respectively, in accordance with
the Master Directions, from the Department of Payment and Settlement
Systems, Reserve Bank of India, under the Payment and Settlement Systems
Act, 2007.
2. Definitions
For the purpose of these
guidelines, the following definitions shall be applicable:
2.1 Issuer: Entities
operating the payment systems issuing PPIs to individuals/organizations.
The money so collected is used by these entities to make payment to the
merchants who are part of the acceptance arrangement, and for facilitating
funds transfer / remittance services.
2.2 Holder:
Individuals/Organizations who obtain / purchase PPIs from the issuers and
use the same for purchase of goods and services, including financial
services, remittance facilities, etc.
2.3 Prepaid Payment
Instruments (PPI): PPIs are payment instruments that facilitate
purchase of goods and services, including financial services, remittance
facilities etc. against the value stored on such instruments. PPIs that can
be issued in the country are classified under three categories viz. (i)
Closed system prepaid payment instruments (ii) Semi-closed system prepaid
payment instruments and (iii) Open system prepaid payment instruments.
2.4 Closed System
Prepaid Payment Instruments: These are PPIs issued by an entity,
including individuals, proprietorship firms, partnership firms etc., for
facilitating the purchase of goods and services from that entity only.
These instruments do not permit cash withdrawal or redemption. As these
instruments cannot be used for payments and settlement for third party
services, the issue and operation of such instruments are not classified as
payment systems requiring approval / authorisation by the Reserve Bank of
India.
2.5 Semi-Closed System
Prepaid Payment Instruments: These are PPIs which can be used for
purchase of goods and services, including financial services, remittance
facilities etc. at a group of clearly identified merchant locations/
establishments which have a specific contract with the issuer (or contract
through a payment aggregator / payment gateway) to accept the PPIs as
payment instruments. These instruments do not permit cash withdrawal,
irrespective of whether they are issued by bank or non-bank PPI Issuers.
Semi-closed PPIs issued by banks and non-banks would have same features,
unless otherwise specified.
2.6 Open System Prepaid
Payment Instruments: These are PPIs which shall be only issued by
banks, can be used for purchase of goods and services, including financial
services, remittance facilities etc. at any merchant locations. Banks
issuing such PPIs shall also facilitate 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, denominated in INR, that shall be issued
to any holder, unless otherwise specified.
2.8 Merchants: These
are establishments who have a specific contract with the PPI issuer (or
contract through a payment aggregator / payment gateway) to accept the PPIs
issued by PPI issuers against the sale of goods and services, including
financial services.
3. Eligibility to issue
semi-closed and open system PPIs
3.1 Banks who comply with the
eligibility criteria, including those stipulated by the concerned
regulatory department of Reserve Bank of India shall be permitted to issue
all categories of PPIs, after obtaining approval from the Department of
Payment and Settlement Systems, Reserve Bank of India.
3.2 However, taking into account
the technical requirements, only those banks providing Mobile Banking
facilities to their customer shall issue mobile phone-based PPIs (for
example, mobile wallets)
3.3 Other entities, including
Non-Banking Financial Companies, shall be permitted to issue only
semi-closed system PPIs, including mobile phone-based PPIs (for example,
mobile wallets).
4. Cross Border Transactions
4.1 Foreign Exchange Prepaid
Payment Instruments: Persons authorized under Foreign Exchange Management
Act (FEMA) to issue foreign exchange denominated prepaid payment
instruments and where such entities 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.
4.2 Full-KYC reloadable
semi-closed and open system PPIs issued by Bank PPI Issuers having AD
licence shall be permitted to be used in cross-border transactions (for
permissible current account transactions only), subject to adherence to
extant norms governing such transactions, including extant Liberalised
Remittance Scheme norms. Prefunding of online merchant’s account shall not
be permitted using such Rupee denominated PPIs. Issuers shall enable this
facility only on explicit request of the PPI holders and shall apply, to
begin with, a per transaction limit of not exceeding Rs.5000/- for such
cross-border transactions.
5. Capital and other eligibility
requirements
5.1 Licensed / Scheduled Banks
and Registered Non-Banking Financial Companies (NBFCs) shall be permitted
to issue PPIs obtaining approval / authorisation from Reserve Bank of
India.
5.2 All entities, seeking
approval / authorisation from the Reserve Bank of India under the Payment
and Settlement Systems Act, 2007 henceforth, shall have a minimum positive
net worth of Rs. 25 crore as per the last audited balance sheet and the
same shall be maintained at all times. Entities shall submit a certificate
for compliance with the networth requirement at the time of making
application for authorisation and also annually by end-September as per the
audited balance sheet.
5.3 Net-worth will consist of
‘paid up equity capital, preference shares which are compulsorily
convertible into equity capital, free reserves, balance in share premium
account and capital reserves representing surplus arising out of sale
proceeds of assets but not reserves created by revaluation of assets’
adjusted for ‘accumulated loss balance, book value of intangible assets and
Deferred Revenue Expenditure, if any’. It shall be noted that while CCPS
reckoned for computation of net worth can be either non-cumulative or
cumulative, these should be compulsorily convertible into equity shares and
the shareholder agreements should specifically prohibit any withdrawal of
this preference capital at any time.
5.4 Newly incorporated entities
which may not have an audited statement of financial accounts shall submit
a certificate from their Chartered Accountants regarding the current net
worth along with provisional balance sheet. They shall also submit
documents in support of the capital infusion and the funds available to
undertake this business.
5.5 The final approval in the
case of banks and NBFCs shall be determined on the basis of the
recommendation of the concerned regulatory / supervisory department of the
Reserve Bank of India as applicable.
5.6 The existing non-bank PPI
issuers shall also comply with the enhanced capital requirements by
September 30, 2020 for the financial position as on March 31, 2020, failing
which they shall not be permitted to carry on this business beyond December
31, 2020. Till such time, the existing PPI issuers shall continue to
maintain the capital requirements under which they were authorised.
5.7 Applicant entities having
FDI/FII should meet the minimum capital requirement as applicable under
extant Consolidated FDI policy guidelines of Government of India.
5.8 Non-bank entities applying
for authorisation shall be a company incorporated in India and registered
under the Companies Act 1956 / Companies Act 2013.
5.9 The Memorandum of
Association (MOA) of the applicant entity shall cover the proposed activity
of operating as a PPI issuer.
6. Authorisation Process for
non-bank entities
6.1 A non-bank entity desirous
of setting up payment systems for issuance of PPIs shall be required to
apply for authorization in Form A as prescribed under Regulation 3(2) of
the Payment and Settlement System Regulations, 2008.
6.2 The applications shall be
initially screened by RBI to ensure prima facie eligibility
of the applicants. RBI shall also check ‘fit and proper’ status of the
applicant and management by obtaining inputs from other regulators, government
departments and self-declarations of the entities directors, as deemed fit.
Applications of those entities not meeting the eligibility criteria, are
incomplete / not in the prescribed form with all details, shall be returned
with no refund of the application fees.
6.3 In addition to the
compliance of the proposal to the applicable guidelines, RBI shall also
apply checks, inter alia, on certain essential aspects like customer
service and efficiency, technical and other related requirements, before
granting authorization to the applicants.
6.4 Subject to meeting the
eligibility criteria and other conditions, the Reserve Bank of India issues
an ‘in-principle’ approval. The validity of in-principle approval issued by
RBI shall be six months from the date of granting such in-principle
approval. The entity shall submit a satisfactory System Audit Report to RBI
within these six months, failing which the in-principle approval shall
lapse automatically. An entity can obtain one-time extension of six months
by making a request in writing in advance with valid reasons. The RBI
reserves the right to decline such request for extension.
6.5 Subsequent to the issue of
the in-principle approval, if any adverse features regarding the entity/
promoters/ group come to the notice of the RBI, the RBI may impose
additional conditions and if warranted, the in-principle approval shall be
withdrawn.
6.6 Entities granted final
authorization shall commence business within six months from the grant of
Certificate of Authorization failing which the authorization shall lapse
automatically. An entity can obtain one-time extension of six months by
making a request in writing in advance with valid reasons. The RBI reserves
the right to decline such request for extension.
6.7 The Certificate of
Authorisation shall be subject to review and shall be valid for five years
unless otherwise specified.
6.8 PPI Issuers, considering
introducing any material changes in the processes other than those approved
/ authorized, shall obtain prior approval of the RBI and also submit a
system audit report, if required.
6.9 Entities seeking renewal of
authorization shall apply in writing to RBI at least three months before
the expiry of validity period, failing which RBI reserves the right to
decline the renewal request.
6.10 Non-bank PPI Issuers, shall
henceforth obtain prior written permission of the Reserve Bank in respect
of:
a.
any
takeover or acquisition of control1 of
non-bank entity, which may or may not result in change of management;
b.
any
change in the management of non-bank entity, which would result in change
in more than 30 per cent of the directors, excluding independent directors.
Prior approval shall not be required for those directors who get re-elected
on retirement by rotation.
7. Safeguards against Money
Laundering (KYC/AML/CFT) Provisions
7.1 The Know Your
Customer/Anti-Money Laundering/Combating Financing of Terrorism guidelines
issued by the Reserve Bank of India, from time to time, shall apply mutatis
mutandis to all the entities issuing PPIs.
7.2 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. Entities shall put in place necessary systems to
ensure compliance with these guidelines.
7.3 The use of INR denominated
PPIs for cross border transactions shall not be permitted except as
provided for at paragraph 4.2 of the Master Directions.
7.4 PPI Issuers shall maintain a
log of all the transactions undertaken using the PPIs issued by them. This
data shall be made available for scrutiny by the Reserve Bank or any other
agency / agencies as may be advised by the Reserve Bank. The Issuers shall
also file Suspicious Transaction Report (STR) to Financial Intelligence
Unit – India (FIU-IND).
8. Issuance, loading and
reloading of PPIs
8.1 All entities authorised to
issue prepaid payment instruments by Reserve Bank of India are permitted to
issue reloadable or non-reloadable prepaid payment instruments depending
upon the permissible category of PPIs.
8.2 Issuers shall have a clearly
laid down policy, with Board approval, for issuance of various categories
of PPIs and all activities related thereto.
8.3 PPI Issuers shall ensure
that the company name, for which authorisation / approval for issuance and
operating PPI system has been given, is necessarily displayed along with
the PPI brand name in all instances.
8.4 PPI Issuers shall ensure
that no interest is payable on PPI balances.
8.5 PPIs shall be permitted to
be loaded / reloaded by cash, by debit to a bank account, by credit and
debit cards, and other PPIs (as permitted from time to time).
8.6 PPI Issuers shall be
permitted to issue PPIs (as outlined under para 9.2 and 9.4 below) to
employees / staff / contract workers / customers etc. (collectively called
as beneficiaries) which are loaded / reloaded from full KYC bank accounts
of companies / private organisations, Government organisations /
departments, financial institutions, individuals (collectively called as
payers) etc. Issuers shall provide this facility after completing due
diligence of the payers. Loading / reloading of such PPIs shall be done
after obtaining necessary authorisation and beneficiary details from the
payers. The Issuers shall be responsible for all customer related aspects
of these PPIs.
8.7 Cash loading to PPIs shall
be limited to Rs.50,000/- per month subject to overall limit of the PPI.
8.8 PPI Issuers shall ensure
that PPIs are not created in the system, including by their agents, only
for the purpose of facilitating cash-based remittances to bank accounts.
8.9 The loading in the PPIs
covered under these Directions shall be in INR only.
8.10 The PPIs may be issued as
smart cards, magnetic stripe cards, internet wallets, mobile wallets, and
any such form / instrument which can be used to access the PPI and to use
the amount therein. PPIs in the form of paper vouchers shall no longer be issued
from the date of the Master Directions.
8.11 Banks shall be permitted to
issue and reload PPIs, using permitted payment instruments, at their
branches, ATMs and through their business correspondents appointed as per
the guidelines issued by the Reserve Bank in this regard.
8.12 Banks and non-banks shall
be permitted to issue and reload such payment instruments through their
authorised outlets or through their authorized / designated agents (other
than BCs in case of banks) using permitted payment instruments subject to
following conditions:-
a.
The
Board approved policy shall clearly lay down the framework for engaging
agents for the purpose of issuance and reloading of PPIs.
b.
Issuers
shall carry out proper due diligence of the persons appointed as authorized
/ designated agents for issue / reloading of permissible categories of
PPIs.
c.
Issuers
shall be responsible for all the PPIs issued by the authorized / designated
agents.
d.
Issuers
shall be responsible as the principal for all the acts of omission or
commission of their authorized / designated agents.
e.
Issuers
shall ensure preservation of records and confidentiality of customer
information in their possession as well as in the possession of their
authorised / designated agents.
f.
The
PPI issuers shall regularly monitor the activities of their authorized /
designated agents and also carry out a review of the performance of various
agents engaged by them at least once in a year.
g.
Issuers
and their authorized / designated agents shall ensure adherence to
applicable laws of the land, including KYC/AML/CFT norms.
8.13 PPI Issuers shall ensure
that there is no co-mingling of funds originating from any other activity
that the Issuer may be undertaking such as business correspondent of
bank/s, intermediary for payment aggregation, payment gateway etc.
8.14 Issuance of PPIs under
co-branding arrangements:
a.
Authorised
PPI issuers shall be permitted to co-brand such instruments with the
name/logos of financial institutions / Government Organisation etc. for
whose customers/beneficiaries such co-branded instruments are to be issued.
b.
The
name of the issuer shall be visible prominently on the payment instrument.
c.
The
co-branding partner shall be having its presence in India.
d.
All
PPI issuers desirous of issuing such co-branded PPIs shall carry out due
diligence in respect of the co-branding partner and seek one time approval
from Reserve Bank of India.
e.
In
case of co-branding arrangements, bank PPI issuers shall adhere to the
instructions contained in the circular RBI/2012-13/325 DBOD.No.FSD.BC.
67/24.01.019/2012-13 dated December 12, 2012. In case of other authorized
non-bank PPI Issuers, where co-branding arrangements take place between two
non-bank PPI Issuers, the agreement shall clearly indicate which partner
shall be the PPI Issuer.
f.
The
co-branding arrangement shall be as per the Board approved policy of the
PPI issuer. The policy shall specifically address issues pertaining to the
various risks associated with such an arrangement including reputation risk
and the PPI issuer shall put in place suitable risk mitigation measures.
The policy shall also clearly indicate the roles and responsibilities,
obligations and liabilities of each co-branding partner.
g.
The
PPI issuer shall be liable for all acts of the co-branding partner.
h.
The
instructions/ guidelines on KYC/AML/CFT, issued by RBI from time to time,
shall be adhered to, in respect of all PPIs issued under the co-branding
arrangement. The PPI issuer shall not reveal any information relating to
customers obtained at the time of opening the PPI and the co-branding
entity shall not be permitted to access any details of customer’s accounts
that may violate the PPI issuer’s secrecy obligations.
8.15 PPI issuers already having
co-branding arrangements at the time of issuance of this Master Directions
shall review their existing arrangements to meet the above requirements and
shall also submit the details of existing co-branding arrangements to the
Reserve Bank.
9. Types of Prepaid Payment
Instruments
9.1 The maximum value of any
prepaid payment instrument, where specific limits have not been prescribed,
shall not exceed Rs 50,000/-.
9.2 Issuance of Semi-closed PPIs
by banks and non-bank PPI Issuers
Banks and authorised non-bank
entities shall be permitted to issue the following types of semi closed
PPIs, on carrying out Customer Due Diligence as indicated for each type of
PPI.
(i) PPIs upto Rs.20,000/- by
accepting minimum details of the customer
a.
The
amount outstanding at any point of time in such PPIs shall not exceed Rs.
20,000/-.
b.
The
total value of amount loaded / reloaded in such PPIs during any given month
shall not exceed Rs. 20,000/-.
c.
These
PPIs can be reloadable in nature and shall be issued only in electronic
form, including cards.
d.
The
minimum details shall include One Time Pin (OTP) verified mobile number (at
least in case of e-wallets / m-wallets)and self-declaration of name,
address, gender, date of birth and unique identification number of any of
the ‘officially valid document’ defined under Rule 2(d) of the PML Rules
2005, as amended from time to time.
e.
These
PPIs shall be converted into full KYC semi-closed PPIs within a period of
60 days from the date of issue of PPI, failing which no further credit
shall be allowed in such PPIs. However, the PPI holder shall be allowed to
use the balance available in the PPI.
f.
PPI
issuers shall ensure that this category of PPI is not issued to the same
user in future using the same mobile number and same minimum details.
g.
Fund
transfers from such PPIs to bank accounts and also to PPIs of same issuers
(and to PPIs issued by other issuers as and when enabled) shall not exceed
Rs 10,000/- per month.
h.
PPI
Issuers shall decide the limit of funds transfer where the funds have to be
transferred ‘back to source’ (payment instrument from where the PPI was
loaded) or ‘own bank account of the PPI holder’ (duly validated by the
Issuer) within the overall PPI limit.
i.
PPI
issuers shall also give the holders an option to close the PPI and transfer
the balance as per the applicable limits of that category of PPI. For this
purpose, the Issuers shall provide an option, including at the time of
issuing the PPI, to the holder to provide details of pre-designated bank
account or other PPIs of same issuer (or other issuers as and when
permitted) to which the balance amount available in the PPI shall be
transferred in the event of closure / expiry of validity period of such
PPIs.
(ii) PPIs upto Rs.1,00,000/-
with full KYC2
a.
The
amount outstanding in such PPIs shall not exceed Rs.1,00,000/- at any point
of time.
b.
These
PPIs can be reloadable in nature and shall be issued only in electronic
form, including cards.
c.
PPI
Issuers shall decide the limit of funds transfer where the funds have to be
transferred ‘back to source’ (payment instrument from where the PPI was loaded)
or ‘own bank account of the PPI holder’ (duly validated by the Issuer)
within the overall PPI limit.
d.
PPI
Issuers shall provide the facility of ‘pre-registered beneficiaries’
whereby the PPI holder can register the beneficiary by providing their bank
account details, details of PPIs issued by same issuer (or different
issuers as and when permitted).
e.
In
case of such preregistered beneficiaries, the funds transfer limit shall
not exceed Rs. 1 lakh per month per beneficiary. PPI Issuers shall set the
limits within this ceiling taking into account the risk profile of the PPI
holders and other operational risks, etc.
f.
The
funds transfer limits for all other cases shall be restricted to
Rs.10,000/-per month.
g.
PPI
Issuers shall clearly indicate these limits to the PPI holders and also
provide necessary options to PPI holders to set their own fund transfer
limits.
h.
PPI
issuers shall also give the holders an option to close the PPI and transfer
the balance as per the applicable limits of that category of PPI. For this
purpose, the Issuers shall provide an option, including at the time of
issuing the PPI, to the holder to provide details of pre-designated bank
account or other PPIs of same issuer (or other issuers as and when
permitted) to which the balance amount available in the PPI shall be
transferred in the event of closure / expiry of validity period of such
PPIs.
9.3 Migration of existing
minimum details semi-closed PPIs issued by banks and non-banks
a.
PPI
Issuers shall ensure that all the existing minimum detail semi-closed PPIs3 issued
by them as on the date of issue of the Master Directions, are converted
into full KYC semi-closed PPIs as indicated in para 9.2 (ii) above, by June
30, 2017, failing which no further credit shall be allowed in such PPIs.
b.
PPI
Issuers shall make their customers aware of these changes and shall give
all such existing semi-closed PPI holders a one-time option to transfer the
existing balance in the PPI to other PPIs of same issuer or to a bank
account without any transaction limit. No charges shall be levied by the
PPI Issuers on the PPI holders for such fund transfers.
c.
Till
the conversion of these PPIs to full KYC semi-closed PPIs (i.e. till June
30, 2017), all limits as applicable to PPIs under category 9.2 (i) of these
Master Directions shall be applicable.
d.
The
above conditions shall also apply to the migration of existing PPIs issued
under paragraph 7.2(ii) of Master Circular
DPSS.CO.PD.PPI.No.01/02.14.006/2016-17 dated July 1, 2016.
e.
PPI
Issuers shall submit the data relating to migration of existing PPIs in the
prescribed format on a monthly basis.
9.4 Issuance of open system PPIs
by banks
a.
Only
banks shall be permitted to issue open system PPIs after full KYC4 in
addition to semi closed PPIs listed above.
b.
These
PPIs shall be reloadable in nature and issued only in electronic form,
including cards.
c.
The
amount outstanding at any point of time in such PPIs shall not exceed
Rs.1,00,000/-.
d.
Funds
transfer limits from such PPIs shall be same as semi-closed full KYC PPIs
(as per paragraph 9.2 (ii) of these Master Directions).
e.
Funds
transfers from such PPIs shall also be permitted to other open system PPIs,
debit cards and credit cards.
10. Specific categories of
Prepaid Payment Instruments
10.1 Issuance of prepaid Gift
instruments
Bank and non-bank entities are
permitted to issue prepaid gift instruments subject to the following
conditions:
a.
The
maximum validity of the prepaid gift instruments shall be three years.
b.
Maximum
value of each prepaid gift instrument shall not exceed Rs. 20,000/-.
c.
These
instruments shall not be reloadable.
d.
Cash
withdrawal as well as fund transfer shall not be permitted for such
instruments. However, PPI Issuers shall permit transfer of outstanding
balance in the PPI ‘back to source’ (payment instrument from where the PPI
was loaded) in case the purchaser requests for the same.
e.
KYC
details of the purchasers of such instruments shall be maintained by the
PPI Issuer and made available on demand.
f.
Entities
shall 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.
10.2 Issuance of prepaid Meal
instruments
Banks and non-bank entities
shall be permitted to issue prepaid meal instruments under B2B arrangements
subject to following conditions:
a.
Such
PPIs shall be issued only in electronic form, including cards, and are
reloadable.
b.
Entities
presently issuing meal vouchers under B2B arrangements in paper voucher
form shall commence issuance of such PPIs in electronic form, including
cards, at the earliest, but not later than December 31, 2017. Prepaid meal
instruments in paper voucher form shall not be accepted beyond December 31,
2017.
c.
PPI
Issuers shall enter into arrangements only with employers whose due
diligence has been completed.
d.
Such
PPIs shall be loaded / reloaded only from the funds deployed by the
employers (for instance, from their bank account) with suitable
authorization to the PPI Issuers to credit the PPIs of the employees.
e.
PPI
issuers shall obtain and maintain the details of employees (name, address,
gender, employee identification etc.) as obtained from the employers, to
whom such PPIs are being issued and funds are loaded/reloaded.
f.
The
minimum validity of the prepaid meal instruments shall be one year from the
date of loading. Existing paper vouchers shall not be valid beyond December
31, 2017.
g.
Maximum
value in such PPIs at any point of time shall not exceed Rs.1,00,000/-.
h.
Cash
withdrawal or fund transfer shall not be permitted for such instruments.
10.3 Issuance of PPIs for credit
of cross border inward remittance
a.
Bank
and non-bank PPI Issuers, who have been appointed as the Indian agent of
the authorised overseas principal, shall be permitted to issue PPIs to
beneficiaries of inward remittances under the Money Transfer Service Scheme
(MTSS) of the Reserve Bank of India. Alternately, such PPIs shall be
permitted to be issued by the bank and non-bank PPI Issuers where the
Indian agent of the overseas principal has also been appointed as the agent
of the PPI Issuer.
b.
However,
authorised non-bank PPI issuers shall be permitted to issue such
semi-closed PPIs for a period of one year subject to review.
c.
Such
PPIs shall be issued in adherence to extant norms stipulated for this
purpose under the MTSS Guidelines issued by Foreign Exchange Department,
Reserve Bank of India.
d.
PPI
Issuers shall have clearly laid down Board approved policy for issuance of
such PPIs.
e.
Only
full-KYC PPIs shall be issued to the beneficiaries.
f.
The
PPI shall be loaded only with the remittance proceeds received under the
MTSS guidelines.
g.
The
maximum value in such PPIs at any point of time shall not exceed Rs. 50,000/-.
h.
The
PPIs shall be reloadable and issued only in electronic form, including
cards.
i.
Splitting
of single credits among different modes of payment shall not be permitted.
Any amount received in excess of Rs. 50,000/- under MTSS shall be paid by
credit to a bank account.
j.
Issuers
shall facilitate transfer of funds from such payment instruments to a
regular bank account of the beneficiary, if asked for, subject to same
conditions of remittance for full-KYC PPIs as stipulated under paragraph
9.2 (ii) of these Master Directions.
k.
Issuers
shall be responsible for all customer service aspects related to these
PPIs.
l.
Issuers
shall be liable for all acts of the agents for PPI Issuance.
m.
The
roles and responsibilities of the PPI Issuers for the PPI related activities
shall be distinct from the roles and responsibilities as Indian Agents
under MTSS.
10.4 Issuance of PPI for Mass
Transit Systems (PPI-MTS)
a.
These
semi-closed PPIs shall be issued by mass transit system operator (PPI-MTS)
after authorisation under the Payment and Settlement Systems Act, 2007 to
issue and operate such semi-closed PPIs.
b.
The
PPI-MTS shall necessarily contain the Automated Fare Collection application
related to the transit service to qualify as PPI-MTS.
c.
Apart
from the mass transit system, such PPI-MTS shall be used only at other
merchants whose activities are allied to or are carried on within the
premises of the transit system
d.
The
PPI-MTS issuer shall ensure on-boarding of merchants (only those permissible
as under (c) above) following due procedure applicable to any other PPI
issuer
e.
The
PPI-MTS shall have minimum validity of one year from the date of issue
f.
The
issuer may decide upon the desired level of KYC, if any, for such PPIs
g.
The
PPI-MTS issued shall be reloadable in nature and the maximum value
outstanding in PPI cannot exceed the limit of Rs. 3,000/-(Rupees Three
Thousand Only)at any point of time
h.
Cash-out
or refund or funds transfer shall not be permitted from these PPIs
i.
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 shall continue to be
applicable in respect of PPI-MTS.
10.5 From the date of issuance
of these Master Directions, PPI Issuers shall cease to issue PPIs of any
other category as permitted earlier under Master Circular
DPSS.CO.PD.PPI.No.01/02.14.006/2016-17 dated July 1, 2016.
10.6 Rupee denominated PPIs
issued by banks for visiting foreign nationals and NRIs under paragraph
7.11 of Master Circular DPSS.CO.PD.PPI.No.01/02.14.006/2016-17 dated
July 1, 2016 stands discontinued from the date of issuance of these
Master Directions. PPI issuers shall allow the holders to use the
outstanding balance in such PPIs till their validity subject to the
conditions under which these PPIs were issued. PPI issuers shall, at the
request of the holder, refund the unutilized balance in the PPI in
adherence to extant foreign exchange regulations.
10.7 Action to be initiated in
case of existing specific categories of PPIs issued by banks:
a.
All
PPIs issued under paragraph 7.6, 7.7, 7.8, 7.9 and 7.10 of Master
Circular DPSS.CO.PD.PPI.No.01/02.14.006/2016-17 dated July 1, 2016 and
paragraph 7.9 of circular DPSS.CO.PD.No.1610/02.14.006/2016-17 dated
December 27, 2016, issued and existing as on the date of this Master
Direction shall be converted into full KYC PPIs as indicated under
paragraph 9.2 (ii) or 9.4, as applicable, of these Master Directions by
June 30, 2017, failing which no further credit shall be allowed in such
PPIs.
b.
PPI
Issuers shall make their customers aware of these changes and shall give
all such existing PPI holders a one-time option to transfer the existing
balance in the PPI to other PPIs of same issuer or to a bank account
without any transaction limit. No charges shall be levied by the PPI
Issuers on the PPI holders for such fund transfers.
c.
Till
the conversion of these PPIs to full KYC PPIs (i.e. till June 30, 2017),
all limits as applicable to PPIs under paragraph 9.2 (i) of these Master
Directions shall be applicable. Where such PPIs had been issued as open
system PPIs, the cash withdrawal limits, if any, shall be as hitherto.
d.
No
further credit shall be allowed in PPIs which are not converted into full
KYC semi-closed PPIs by June 30, 2017.
e.
PPI
Issuers shall submit the data relating to migration of existing PPIs in the
prescribed format on a monthly basis.
11. Deployment of Money
Collected
11.1 The money collected against
issuance of prepaid 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 prepaid 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.
11.2 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.
11.3 Non-bank PPI Issuers are
hereby directed by the Reserve Bank of India under the powers granted to it
under Section 23 A of the Payment and Settlement Systems Act, 2007 (as
amended 2015), to maintain their outstanding balance in an escrow account
with any scheduled commercial bank. Accordingly, for the purpose of
maintenance of the Escrow account, payment systems operated by non-bank
entities for issuance of PPIs shall be deemed to be ‘designated payment
systems’ under Section 23A of the said Act. Maintenance of escrow balance
shall be subject to the following conditions:-
(i) The escrow balance shall
necessarily be 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, the same shall be
effected in a time-bound manner without unduly impacting the payment cycle
to the merchants. The migration shall be completed in the minimum possible
time and with the prior approval of RBI.
(iii) The balance in the escrow
account shall not, at the end of the day, be lower than the value of
outstanding PPIs and payments due to merchants. While as far as possible
PPI issuers shall ensure immediate credit of funds to escrow on issue, load
/ reload of PPIs to the PPI holders, under any circumstances such credit to
escrow account shall not be later than the close of business day (the day
on which the PPI has been issued, loaded / reloaded)
(iv) Following debits and
credits shall only be permitted from the escrow account:
Credits
a.
Payments
received towards issue, load / 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 shall 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: The payment towards service charges and commission
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.
(v) PPI issuer shall be required
to submit the list of merchants acquired by it to the bank and update the
same from time to time. The bank shall 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) With the growing acceptance
of PPIs in e-commerce payments, including in digital market places, the
payment mechanism is often facilitated using the services of payment
aggregators / payment gateways. In such a scenario, the emerging practice
observed is that the PPI Issuer has the necessary agreements with the
digital marketplace and/or the payment aggregator / gateway rather than the
individual merchants who are accepting the PPIs issued by the Issuer as a
payment instrument. In view of the above, PPI issuers shall obtain an
undertaking along with the list of the merchants (who are actually
accepting payments through the PPIs of the Issuers) from the digital
marketplace and/or payment aggregator / gateway that the payments made by
the Issuers is used for onward payments to the respective merchants. This
undertaking and list shall be submitted by the Issuers to the bank maintain
the escrow account.
(vii) Banks maintaining the
escrow accounts of PPI Issuers shall maintain the updated merchant list.
Such banks shall also submit a certificate to this effect to the Reserve
Bank of India.
(viii) Further, there shall 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.
(ix) A certificate, as
prescribed by the Bank from time to time shall 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 prepaid payment instruments issued including payments due to merchants.
The certificates, as per the prescribed format, shall be submitted within a
fortnight from the end of the quarter to which it pertains.
(x) The entities shall also
submit an annual certificate, as above, coinciding with the accounting year
of the entity to the Reserve Bank of India.
(xi) Adequate records indicating
the daily position of the value of instruments outstanding including
payments due to merchants 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.
(xii) Settlement of funds with
merchants shall not be co-mingled with other business handled, if any by
the PPI issuer.
(xiii) No interest shall be
payable by the bank on such balances, except as indicated in para 11.4
below.
11.4 As an exception to the
above (11.3 xiii), the non-bank PPI issuer 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 entities who have been in business for at least one year (26
fortnights).
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.
12. Validity
12.1 All prepaid payment
instruments issued in the country shall have a minimum validity period of
one year from the date of activation/issuance to the holder.
12.2 PPI issuers shall caution
the PPI holder at reasonable intervals, during the 45 days’ period prior to
expiry of validity period of the PPI. 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 issuance of the PPI. Even after the expiry
of validity period, grace period of at least 60 days shall be given to the
customer.
12.3 Issuers shall clearly
indicate to the customer at the time of issuance and load / reload of PPIs
the information about expiry period as well as forfeiture policy. Such
information shall be clearly enunciated in the terms and conditions of sale
of PPI. Where applicable, it shall also be clearly outlined on the website
of the issuer.
12.4 PPIs with zero balance for
a consecutive period of one year shall be closed automatically by the
issuers, and a notice sent to the PPI holders.
12.5 PPI issuers shall give the
holders an option to close the PPI and transfer the balance as per the
applicable limits of that category of PPI. For this purpose, the Issuers
shall provide an option to the holder to provide details of pre-designated
bank account or other PPIs of same issuer to which the balance amount
available in the PPI shall be transferred in the event of closure of such
PPIs.
12.6 The framework for
forfeiture of PPIs shall be advised by the Reserve Bank of India in due
course.
13. Transactions Limits
13.1 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. PPI
Issuers shall decide to put in place such limits taking into account the
risk perception of the holders as per their risk management policy.
13.2 Transaction limits and
monthly caps, if any, indicated against each category of the PPI shall be
adhered to.
13.3 Handling refunds:
a.
Refunds
in case of failed / returned / rejected / cancelled transactions shall be
applied to the respective PPI account immediately, to the extent that
payment was made initially by debit to the PPI, even if such application of
funds results in exceeding the limits prescribed for that category of PPI.
b.
PPI
issuers shall be required to maintain complete details of such returns /
refunds etc. and be in readiness to provide them as and when called for.
c.
Further,
PPIs issuers shall also be required to put in place necessary systems that
enable them to monitor frequent instances of refunds taking in place in
specific accounts and shall be in a position to substantiate with proof for
audit purposes to the regulator.
13.4 In the case of open system
prepaid payment instruments issued by banks in India, cash withdrawal at
POS shall be permitted upto a limit of Rs.2000/- per day in rural areas and
Rs.1000/- per day in other areas, subject to the same conditions as
applicable hitherto to debit cards (for cash withdrawal at POS).
14. Redemption
14.1 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.
14.2 The holders of prepaid
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.
15. Security, Fraud prevention
and Risk Management Framework
15.1 PPI issuers shall put in
place adequate information and data security infrastructure and systems for
prevention and detection of frauds. A strong risk management system is
equally necessary for the Issuers to meet the challenges of fraud and
customer protection.
15.2 All PPI issuers shall put
in place Board approved Information Security policy for the safety and
security of the payment systems operated by them, and implement security
measures in accordance with this policy to mitigate identified risks. PPI
issuers shall review the security measures on on-going basis but at least
once a year, and after any major security incident or breach or before a
major change to its infrastructure or procedures.
15.3 Accordingly, PPI Issuers
shall ensure that the following framework is put in place to address the
safety and security concerns, ensure risk mitigation and fraud prevention:
a.
In
case of wallets, PPI Issuers shall ensure that separate login is provided
for the PPI account, and access to PPI is not made part of access to other
services offered by the PPI Issuer or its associate / parent / group
company etc.
b.
Issuers
shall put in place appropriate mechanisms to restrict multiple invalid
attempts to login/access to the PPI account, inactivity timeout features
etc.
c.
Issuers
shall provide customer induced options for fixing a cap on transaction
value for different types of transactions / beneficiaries. Customers shall
be allowed to increase the caps or exceed the cap, with additional
authentication and validation.
d.
Issuers
shall put in place limit on the number of beneficiaries that may be added
in a day per PPI.
e.
Issuers
shall introduce a system of alert when a beneficiary is added.
f.
Issuers
shall introduce a system of additional factor of authentication for
authenticating transactions in PPIs, including where PPIs are issued in the
form of cards.
g.
Issuers
shall put in place the mechanism to send alerts when transactions are done
using the PPIs. In addition to the debit or credit amount intimation, the
alert shall also indicate the balance available / remaining in the PPI
after completion of the said transaction.
h.
Issuers
shall put in place mechanism for velocity check on the number of
transactions effected per day/ per beneficiary.
i.
PPI
issuers shall put in place suitable cooling period for funds transfer upon
opening the PPI or loading of funds into the PPI or after adding a
beneficiary so as to mitigate the fraudulent use of PPIs.
j.
Issuers
shall put in place suitable internal and external escalation mechanisms in
case of suspicious operations, besides alerting the customer in case of
such transactions.
k.
Issuers
shall also put in place suitable mechanism to prevent, detect and restrict
occurrence of fraudulent transactions including loading / reloading funds
into the PPI.
15.4 Issuers shall put in place
centralized database/ MIS to prevent multiple purchase of PPIs at different
locations, leading to circumvention of limits, if any, prescribed for their
issuance.
15.5 Where APIs are provided to
their authorised / designated agents, Issuers shall ensure that the
compliance to regulatory requirements is strictly adhered to by the
systems.
15.6 PPI issuers (banks and
non-banks) shall report the frauds on a monthly / quarterly basis to the
concerned Regional Office (Mumbai Regional Office for banks) in the format
prescribed in these Directions. Instances of fraud along with the modus-operandi
adopted by the perpetrators, if known and analysed, shall be reported
separately.
15.7 PPI issuers shall establish
a mechanism for monitoring, handling and follow-up of cyber security
incidents and cyber security breaches. The same shall be reported
immediately to Reserve Bank of India. It shall also be reported to CERT-IN
as per the details notified by CERT-IN.
16. Customer Protection and
Grievance Redressal Framework
16.1 PPI 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:
a.
All
charges and fees associated with the use of the instrument.
b.
The
expiry period and the terms and conditions pertaining to expiration of the
instrument.
c.
The
customer service telephone numbers, including a toll-free number and
website URL, where available.
16.2 PPI Issuers shall put in
place a formal, publicly disclosed customer grievance redressal framework,
including designating a nodal officer to handle the customer complaints /
grievances, the escalation matrix and turn-around-times for complaint
resolution. The framework shall include, at the minimum, the following:
a.
PPI
Issuers shall disseminate information of their customer protection and
grievance redressal policy widely in at least three languages, including
regional languages.
b.
Customer
care contact details (telephone numbers, toll free numbers, email address,
postal address etc.) shall be clearly indicated on Issuer website, if
available; in the mobile wallet apps, if provided; and printed on the
cards, if issued.
c.
PPI
agents shall display proper signage of the PPI Issuer, the customer care
contacts details as above, and also the name and contact details of the
nodal officials for grievance redressal.
d.
PPI
Issuers shall endeavor to provide specific numbers for the complaints
lodged along with the facility to track the status of the complaint by the
customer.
e.
PPI
Issuers shall initiate action to resolve any customer complaint / grievance
not later than 48 hours and endeavor to resolve the complaint within 30
days from the date of receipt of such complaint / grievance.
16.3 In case of PPIs issued by
banks, customers shall have recourse to Banking Ombudsman Scheme for
grievance redressal. Banks shall also be responsible for addressing
customer grievance issues for co-branded PPIs issued by them.
16.4 PPI issuers shall create
sufficient awareness and educate customers in the secure use of the PPIs,
including the need for keeping passwords confidential, procedure to be
following in case of loss or theft of authentication data or if any fraud /
abuse is detected, etc.
16.5 PPI Issuers shall clearly
outline the amount and process of determining customer liability in case of
unauthorized / fraudulent transactions involving PPIs. This framework shall
be consistent with the customer liability limit instructions issued by the
Reserve Bank of India from time to time.
16.6 PPI issuers shall provide
an option for the PPI holders to generate / receive account statements. The
account statement shall, at the minimum, contain details such as date of
transaction, debit / credit amount, net balance and description of
transaction. The PPI issuer shall also provide transaction history for a
reasonable amount of period.
16.7 PPI Issuers shall report
the receipt of complaints and action taken status thereon in the prescribed
format and frequency.
16.8 PPI Issuers shall ensure
transparency in pricing and the charges as under:
a.
Ensure
uniformity in charges at agent levels
b.
Disclosure
of charges for various types of transactions
c.
Specific
agreements with agents prohibiting them from charging any fee to the
customers directly for services rendered by them on behalf of the PPI
Issuers
d.
Require
each retail outlet/sub-agent to post a signage indicating their status as
service providers for the PPI issuer and the fees for all services
available at the outlet
e.
The
cash collected from the customer should be acknowledged by issuing a
receipt (printed or electronic) on behalf of the PPI issuer
17. System Audit:
17.1 The System Audit is to be
conducted by a firm of Chartered Accountants. The System Audit may be
conducted by a Certified Information Systems Auditor (CISA) and registered
with Information Systems Audit and Control Association (ISACA) or by a
holder of a Diploma in Information System Audit (DISA) qualification of the
Institute of Chartered Accountants of India (ICAI) on an Annual basis.
17.2 The scope of the System
Audit shall include the following:
a.
Technology
deployed so as to ensure that the authorized payment system is being
operated in a safe, secure, sound and efficient manner.
b.
Evaluation
of the hardware structure, operating systems and critical applications,
security and controls in place, including access controls on key
applications, disaster recovery plans, training of personnel managing
systems and applications, documentation, etc.
c.
Compliance
as per security best practices, specifically the application security
lifecycle and patch/vulnerability and change management aspects for the
authorised system and adherence to the process flow approved by the Reserve
Bank.
d.
Comment
on the deviations, if any, in the processes followed from the process flow
submitted to the Reserve Bank while seeking authorisation.
17.3 Authorised entities which
follow an April-March financial year, shall submit the System Audit report
within two months of the close of financial year i.e. by 1st June of that
year. Authorised entities following a calendar year annual closing, shall
submit their System Audit reports by 1st March of the following year.
17.4 Banks shall also be guided
by the circular DBS.CO/CSITE/BC.11/33.01.001/2015-16 on Cyber Security
Framework in Banks dated June 02, 2016, which inter alia, covers
requirements for mobile-based applications.
17.5 All PPI Issuers shall, at
the minimum, put in place following framework in respect of mobile wallets:
i.
The
PPI mobile app should not be allowed to be installed on rooted devices i.e.
system level access should not be allowed.
ii.
Application
Life Cycle Security: The source code audits to be conducted by
professionally competent personnel/ service providers or have assurance
from application providers/ OEMs that the application is free from embedded
malicious / fraudulent code.
iii.
Security
Operations Centre SOC: Integration of system level (Server), application
level logs of mobile applications (PPIs) with SOC for centralised and
coordinated monitoring and management of security related incidents.
iv.
Anti-Phishing:
PPI Issuers should subscribe to Anti-phishing/ anti-rouge app services from
external service providers for identifying and taking down phishing
websites/ rouge applications in the wake of increase of rogue mobile apps/
phishing attacks.
v.
Risk
based Transaction Monitoring: Risk based transaction monitoring or
surveillance process shall be implemented as part of fraud risk management
system.
vi.
Vendor
Risk Management: (a) PPI issuer may necessarily enter into agreement with
the service provider that amongst others provides for right of audit /
inspection by the regulators of the country; (b) Reserve Bank of India
shall have access to all information resources (online/ in person) that are
consumed by PPI provider, to be made accessible to RBI officials by the
Banks when sought, though the infrastructure / enabling resources may not
physically be located in the premises of PPI provider; and (c) Further, PPI
issuer have to adhere to the relevant legal and regulatory requirements
relating to geographical location of infrastructure and movement of data
out of borders.
vii.
Disaster
Recovery: PPI issuer should consider having DR facility to achieve the RTO/
RPO objective for the PPI system. PPI issuers should have BCP/ DR
capabilities and shall adequately and effectively support the PPIs cyber
resilience objectives and should be so designed to enable the PPI issuer to
recover rapidly from cyber-attacks/ other incidents and safely resume
critical operations aligned with recovery time objectives while ensuring
security of processes and data is protected.
viii.
Data
loss prevention (DLP)/ Data Masking Solutions: DLP solution at end-points,
network need to be implemented. Data Masking solution need to be
implemented.
18. Interoperability
Entities meeting the revised
eligibility criteria and adhering to other instructions on safety,
security, risk mitigation etc. contained in these Directions shall be
allowed to participate in other interoperable payment systems, as and when
specificdirections are issued in this regard.
19. Reporting requirements
PPI Issuers shall submit the
reports as per prescribed templates and frequency.
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
|
|
a. Payments to various
merchants/service providers towards reimbursement of claims received from
them
b. Payment to sponsor bank for processing funds transfer instructions
received from PPI holders as permitted by RBI from time to time.
c. Payment towards applicable Government taxes
d. Refunds towards cancellation of transactions in a PPI in case of PPIs
loaded / reloaded erroneously or through fraudulent means.
e. 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.)
f. 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
Net-worth
Certificate
This is with reference to the
paragraph 5.2 and 5.3 of these Master Direction on PPIs. We have perused
the records maintained by the Company. On the basis of our perusal of the
records, the audited/ unaudited financial statements for the period ended
_______ and the information and explanations given to us, we certify that
the Company’s net-worth computed in accordance with the paragraph 5.3 of
these Master Directions as at ________ is Rs. _______ (refer Annexure-A for
computation).
This certificate has been
provided by us at the request of the Company and prepared solely for the
purpose of submission to the RBI.
Annexure
A
Computation of net-worth of
__________ as on _________
Particulars
|
Amount
(INR)
|
Equity Share Capital
|
|
|
|
Add:
|
|
Preference shares which are
compulsorily convertible into equity capital
|
|
Free Reserves
|
|
Share Premium Account
|
|
Capital Reserves (representing
surplus arising out of sale proceeds of assets)
|
|
|
|
Less:
|
|
Revaluation reserves
|
|
Accumulated Losses
|
|
Book Value of intangible
assets
|
|
Deferred revenue expenditure
|
|
|
|
Net-worth as on ________
|
|
Monthly
Certificate on Fraud Reporting
Name of PPI issuing entity:
Month:
Table
1:
|
Type
of Transaction
|
Total
no. of transactions
|
Total
no. of Fraudulent transactions
|
Fraudulent
transactions as proportion to Total transactions (%)
|
Total
amount of transactions
|
Total
amount reported in fruadulent transactions
|
Amount
of Fraudulent transactions as proportion to Total amount of transactions
(%)
|
(1)
|
(2)
|
(3)
|
(4)
= (3) / (2) *100
|
|
|
|
Adding money to wallet
(loading/reloading)
|
|
|
|
|
|
|
PPI to Merhcant (P2M)
|
|
|
|
|
|
|
PPI to PPI (P2P)
|
|
|
|
|
|
|
PPI to Bank account (P2B)
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Table
2:
|
Type
of Transaction
|
Fraud
reported by
|
Total
no. of fraudulent transactions
|
Total
amount reported in fruadulent transactions
|
Amount
saved for such fraudulent transactions
|
Action
taken
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
(10)
|
Adding money to wallet
(loading/reloading)
|
Aggregators / banks
|
|
|
|
|
of which: through credit card
|
|
|
|
|
of which: through debit card
|
|
|
|
|
of which: through internet
banking
|
|
|
|
|
PPI to Merhcant (P2M)
|
Aggregators / banks
|
|
|
|
|
Customers
|
|
|
|
|
Others*
|
|
|
|
|
PPI to PPI (P2P)
|
Aggregators / banks
|
|
|
|
|
Customers
|
|
|
|
|
Others*
|
|
|
|
|
PPI to Bank account (P2B)
|
Aggregators / banks
|
|
|
|
|
Customers
|
|
|
|
|
Others*
|
|
|
|
|
Note: Others may include cases
detected by the PPI issuing entity itself
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
|
Prepaid Payment Instruments in
India – Consolidated Revised Policy Guidelines
|
12.
|
DPSS.CO.PD.No.
2366/02.14.006/2013-14
|
13.05.2014
|
Prepaid Payment Instruments in
India – Consolidated Revised Policy Guidelines
|
13
|
DPSS.CO.PD.No.980/02.14.006/2014-15
|
03.12.2014
|
Issuance and operation of
Prepaid payment instruments (PPIs) in India-Relaxations
|
14
|
DPSS.CO.AD.No.1344/02.27.005/2014-15
|
16.01.2015
|
Computation of Net-worth
|
15
|
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)
|
16
|
DPSS.CO.PD.No.1288/02.14.006/2016-17
|
22.11.2016
|
Special Measures to
incentivise Electronic Payments – (i) Enhancement in Issuance Limits for
PPIs in India (ii) Special measures for merchants
|
17
|
DPSS.CO.PD.No.1610/02.14.006/2016-17
|
27.12.2016
|
Master Circular on Issuance
and Operations of Prepaid Payment Instruments – Amendments to paragraph
7.9
|
18
|
DPSS.CO.PD.No.1669/02.14.006/2016-2017
|
31.12.2016
|
Special measures to
incentivise Electronic Payments – Extension of time
|
1 ‘Control’ shall have
the same meaning as under Section 2 (27) of the Companies Act 2013 and for
listed company shall include any additional parameters as per SEBI
guidelines, if applicable.
2 In case KYC is done
using One Time Pin (OTP) based e-KYC, then the instructions as applicable
to opening this type of account / PPI shall be applicable.
3 Includes the minimum
detail PPIs as per paragraph 7.2(i) of the Master Circular
DPSS.CO.PD.PPI.No.01/02.14.006/2016-17 dated July 1, 2016 and PPIs issued to merchants as per paragraph (ii) of the circular
DPSS.CO.PD.No.1288/02.14.006/2016-17 dated November 22, 2016
4 In case KYC is done
using One Time Pin (OTP) based e-KYC, then the instructions as applicable
to opening this type of account / PPI shall be applicable
|