Banks can issue prepaid instruments only to listed cos: RBI

The Reserve Bank of India (RBI) today said prepaid payment instruments such as smart cards, magnetic stripe cards, mobile wallets could be issued by banks only to corporates listed in India.

In a circular issued to all banks, the RBI said, "Prepaid payment instruments can be issues only to corporate entities listed in any of the stock exchanges in India."

It further said the corporates would have to verify the identity of the employee to whom the card would be issued, along with copies of photograph and a proof of identity.

"The corporate is also required to make available details of bank accounts of the employee to the bank," the RBI said.

The central bank said the maximum value of an individual prepaid payment instrument should not exceed Rs 50,000.

In 2009, the Reserve bank had allowed all banks and non-banking financial institutions (NBFC), meeting the regulatory capital adequacy norms, to issue the instruments which can be used for purchase of goods and services.

Corporates usually avail this facility from the bank for onward issuance to their employees.

Prepaid payment instruments — issued as smart cards, magnetic stripe cards, mobile wallets, paper vouchers, gift cards and travel cards among others — facilitate purchase of goods and services against the value stored in it.

The value stored on the instrument represent the value paid for by the holder of the card.

The money in the prepaid instruments would be loaded by debit to the bank account after fulfilling all know your customer (KYC) requirements.

Further, the RBI has also asked banks to transfer funds from such prepaid instruments to a regular bank account of the employee if the same has been requested for.

Source: Business Standard