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Wednesday, October 3, 2012

RBI rationalises categories of pre-paid payment cards

The Reserve Bank of India (RBI) rationalised the categories and value limit of pre-paid payment cards to three broad categories from five earlier.

The pre-paid cards, technically known as semi-closed pre-paid instruments (PPI) are convenient alternatives to cash and cheques. These are mainly issued by banks and Non-Banking Financial Companies (NBFCs) on payment of specified amount and are used for purchasing goods and services from limited outlets.

As per revised guidelines, the first category of cards will have cash limit of Rs 10,000 and the re-load should not exceed the said limit during a month. These cards can be issued minimum with details of the customer.

Secondly it said, for issuing cards of value of Rs 10,001 to Rs 50,000, officially valid documents will be required and these should be non-re-loadable in nature.

It further said for issuing cards up to value of Rs 50,000 full KYC details will be needed and these can be re-loadable in nature.

The RBI said these cards can only be issued in electronic form.

The RBI said non-banking entities issuing pre-paid cards are required to maintain the outstanding balance in an escrow account with any commercial bank and the account should be credited as and when the issuer sells such a card to the end-user.

To promote cashless transfer of funds, the central bank has also relaxed domestic money transfer norms and said the three categories of pre-paid payment cards will qualify for domestic money transfer.

Under the domestic money transfer facility amount up to Rs 10,000 can be transferred to beneficiaries not having a bank account subject to an overall monthly cap of Rs 25,000 per beneficiary.

Such facilities have been made to facilitate fund transfer, particularly to migrants, who face difficulties in want of proof of identity or address.


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