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RBI/2016-17/311
DCBR.CO.LS.(PCB/RCB).Cir.No.5/07.01.000/2016-17
May
25, 2017
Chief Executive Officers of all
Primary (Urban) Co-operative Banks /
State Co-operative Banks
District Central Co-operative Banks
Dear Sir / Madam,
Regulatory requirements for
issue of Pre-paid Payment Instruments by Co-operative Banks
Please refer to our circular
UBD.CO.BPD.PCB.Cir.No.65/09.69.000/2013-14 dated May 27, 2014 permitting
the UCBs which have installed ATMs and issued ATM cum Debit cards to
introduce semi-closed Prepaid Payment Instruments (PPIs) for payment of
utility bills / essential services upto a limit of Rs.10,000/-.
2. The matter has been revisited
and it has now been decided to permit all licenced co-operative banks
having their own ATM network to issue semi-closed PPIs, provided there are
no restrictions on acceptance or repayment of deposits. This is subject to
the compliance with eligibility criteria and other guidelines as prescribed
by Department of Payment and Settlement Systems (DPSS), Reserve Bank of
India (RBI) from time to time.
3. Further, it has also been
decided to permit co-operative banks satisfying the above criteria to issue
Open System PPIs. The banks should comply with the following additional
regulatory requirements for this purpose:
a) The bank should be CBS
compliant;
b) CRAR should not be less than
10% in the current and preceding financial year;
c) Gross NPAs should be less
than 7% and net NPAs should not be more than 3% in the current and
preceding financial year;
d) Assessed net-worth should be
more than Rs.25 crore as per the last RBI inspection;
e) There should not be any
default in the maintenance of CRR/SLR during the current and preceding
financial year;
f) The bank should have made a
net profit in the preceding financial year;
g) Presence of two professional
directors on the Board of the bank and prevalence of systems and control as
under:
i.
internal
inspection / audit system for all the branches and the Head Office
ii.
concurrent
audit system in all major branches
h) Satisfactory adherence to KYC
/ AML / Combating Financing of Terrorism guidelines issued by the Reserve
Bank from time to time;
i) No monetary penalty should
have been imposed on the bank in last two financial years and during the
year of submitting the application;
j) The bank shall have satisfactorily
implemented a comprehensive Board approved policy on Customer grievance
redressal mechanism which includes escalation matrix for resolution of
customer complaints.
4. The issuance and operation of
prepaid instruments shall also be guided by the instructions issued in this
regard by DPSS, RBI from time to time. Eligible co-operative banks, as
indicated in para 2 and 3 above, desirous to issue PPIs are required to
obtain a No Objection Certificate from the respective Regional Office of
Department of Co-operative Bank Supervision concerned before applying to
DPSS, Central Office, Mumbai for authorization.
Yours faithfully,
(Neeraj Nigam)
Chief General Manager
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