Prepaid payment instruments are those which facilitate purchase of goods and services against the value stored on such instruments. Value stored on them is paid by the holder using a medium (cash, debit card, credit card etc).
These are generally issued in the form of smart cards, mobile wallets, paper vouchers, internet accounts/wallets.
Only those entities who are incorporated in India, have a minimum paid up capital of Rs. 5 crore and minimum positive net worth of Rs 1 crore at all times are permitted to issue such instruments.They should also be in compliance with capital adequacy requirements of RBI from time to time.
All PPIs issued in the country shall have a minimum validity period of 6 months from date of issuance or activation.
PPIs are usually classified into 5 categories as follows:
1. Closed System Payment Instruments
2. Semi-Closed System Payment Instruments
3. Semi-Open System Payment Instruments
4. Open System Payment Instruments
5. Mobile Prepaid Instruments
RBI in Nov, 2016 doubled the limit of prepaid payment instruments limit to Rs 20,000 from earlier limit of Rs 10,000 to facilitate digital transactions. Balance in such PPIs can not exceed Rs 20,000 at one point of time.
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