RBI Guidelines On Prepaid Cards And International ATM Card

"As per RBI directives all debit cards to be issued as domestic unless the customer requests for activation of card for international use. Hence we have marked all our international debit cards (Except cards used internationally in last 12 months) as domestic for ATM and POS usage in our ATM Switch with immediate effect.

SMS informing the same to customers has been sent.

Now onwards, while issuing new debit card, branches should mark International debit card (BIN 452055, 430033, 461765, 536019, 652163, 652202) for International /Domestic ATM/POS use through DCARD menu E and P option. By default card will be domestic 1 1.

ATM Usage POS Usage
0 - both allowed 0 - both allowed
1 - Domestic only 1 - Domestic only
2 - International only 2 - International only
3 - both not allowed 3 - both not allowed

However, if customer wants to change his usage from domestic to International at a later date, we are developing new menu in finacle shortly. Till that time, for change of debit card usage for International /Domestic ATM/POS, will be done at ATM Cell, Digital Banking Dept.
So customer going abroad should be informed about activation of their debit card for International use at ATM/POS.

All such request ( for activation of card for International use) should be sent at email id debitcard@unionbankofindia.com phone no 022-23789501 IP No. 361109/361125 till the time new menu is developed by DIT.

Our Existing Domestic debit cards will continue as domestic as there is no change in their status. Branches are also advised to put a notice in the Bank's Notice Board about the change "

RBI has issued new guidelines for issuance of Prepaid cards 

Collected from Hindu Business Line of Today 

The Reserve Bank of India on Wednesday issued final guidelines for prepaid payment instruments (PPI) such as closed, semi-closed and open wallets. According to the new guidelines, all the PPIs will now be interoperable, which means will allow transaction with each other.

The RBI said that interoperability shall be enabled in phases for the PPIs and that in the first phase, the issuers (both bank and non-bank entities) shall make all KYC-compliant PPIs issued in the form of wallets interoperable amongst themselves through Unified Payments Interface (UPI) within six months from the date of issue of the guidelines.

Subsequently, interoperability shall be enabled between wallets and bank accounts through UPI and for PPIs issued in the form of cards later on. However, banks may continue to issue PPIs in association with authorised card networks.

Besides, RBI has mentioned that PPI issuers will have to adhere to the technical and operational requirements for such interoperability, including those relating to safety and security, risk mitigation, among others.

Charting out the guidelines in a 32-page note, RBI has said that all the companies seeking a licence to operate wallets will have to have a minimum positive net worth of ₹5 crore which needs to be maintained for three years at all times, following which they need to have a net worth of ₹15 crore at all times. Existing wallet companies need to maintain ₹15 crore by March 31, 2020.

On the capital requirement, RBI said that wallets such as Paytm and Mobikwik need to have a minimum net worth of ₹25 crore from the earlier norms of ₹5 crore paid-up capital and ₹1 crore net worth.

It said all the semi-closed PPIs should be upgraded to full KYC norms with 12 months from the date of issue of PPI. The minimum details for KYC shall include OTP verified mobile number and self-declaration of name, address, gender, date of birth and unique identification number of any of the ‘officially valid document’. For existing wallets, companies need to ensure that they will have full KYC by the end of the December 31. Following which, these wallets will cease to exist.

PPIs limit at Rs. 50,000 a month

PTI reports: Prepaid payment instruments cannot be loaded with more than Rs. 50,000 per month and the issuers cannot pay interest on the PPI balances, the Reserve Bank said today.

“All entities approved/authorised to issue PPIs by RBI are permitted to issue re—loadable or non—reloadable PPIs depending upon the permissible type.

“Cash loading to PPIs shall be limited to Rs. 50,000/— per month subject to overall limit of the PPI,” the RBI said in its latest set of directions on ‘Issuance and Operation of Prepaid Payment Instruments’

The Reserve Bank has asked the PPI issuers to ensure that no interest is paid on the PPI balances.

PPIs that can be issued as cards, wallets or any such form can be loaded or reloaded by cash, by debit to a bank account, by credit or by debit card among others. These instruments are basically promoted by the RBI to make electronic payments popular, efficient and more secure.

Also, companies will no longer be allowed to issue such instruments in the paper form except for meal vouchers.

However, these vouchers will have to be replaced in electronic format after December 31, 2017, the RBI added.

For increasing the limit of PPIs to up to Rs. 1 lakh, the issuers will have to do a KYC check of the instrument holder.

Master Direction on Issuance and Operation of Prepaid Payment Instruments

1. Introduction

1.1 In exercise of the powers conferred under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), the Reserve Bank of India (RBI) being satisfied that it is necessary and expedient in the public interest to do so, hereby, issues these Directions.

1.2 Short title and commencement

1. These Directions shall be called the Reserve Bank of India (Issuance and Operation of Prepaid Payment Instruments) Directions, 2017 (Master Direction).
2. These Directions shall come into effect from October 11, 2017.
3. Existing authorised Prepaid Payment Instrument (PPI) issuers shall ensure compliance with the revised requirements on or before December 31, 2017, except where timelines have been specified in this Direction.

1.3 Applicability: The provisions of the Master Direction shall apply to all PPI Issuers, System Providers and System Participants.

1.4 Purpose

1. To provide a framework for authorisation, regulation and supervision of entities operating payment systems for issuance of PPIs in the country;
2. To foster competition and encourage innovation in this segment in a prudent manner while taking into account safety and security of transactions as well as systems along with customer protection and convenience.
3. To provide for harmonisation and interoperability of PPIs

1.5 For the purpose of these Directions, the term ‘entities’ refers to banks and non-bank entities who have approval / authorisation from the RBI to issue PPIs as well as those who are proposing to issue PPIs.

1.6 Banks and non-bank entities have been issuing PPIs in the country after obtaining necessary approval / authorisation from RBI under the Payment and Settlement Systems Act, 2007 (PSS Act). These entities have been operating within the framework of the initial guidelines on “Issuance and Operation of PPIs” issued in April 2009 and the subsequent Master Circulars issued on the subject, as amended from time to time. Taking into account the developments in the field and the progress made by PPI issuers, all existing guidelines issued on the subject till date have been reviewed and are contained in the Master Direction.

1.7 The Master Direction lays down the eligibility criteria and the conditions of operation 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 shall comply with these Directions.

1.8 No entity can set up and operate payment systems for issuance of PPIs without prior approval / authorisation of RBI.

2. Definitions

For the purpose of this Master Direction, the following definitions shall be applicable:

2.1 Issuer: Entities operating the payment systems issuing PPIs to individuals / organisations. 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 / Organisations 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 (PPIs): 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 types viz. (i) Closed System PPIs, (ii) Semi-closed System PPIs, and (iii) Open System PPIs.

2.4 Closed System PPIs: These PPIs are issued by an entity for facilitating the purchase of goods and services from that entity only and do not permit cash withdrawal. As these instruments cannot be used for payments or settlement for third party services, the issuance and operation of such instruments is not classified as payment systems requiring approval / authorisation by the RBI.

2.5 Semi-closed System PPIs: These PPIs are 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 banks or non-banks.

2.6 Open System PPIs: These PPIs are issued only by banks and are used at any merchant for purchase of goods and services, including financial services, remittance facilities, etc. Banks issuing such PPIs shall also facilitate cash withdrawal at ATMs / Point of Sale (PoS) / Business Correspondents (BCs).

2.7 Limits: All ‘limits’ in the value of instruments stated in the Master Direction, 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 to accept the PPIs issued by the PPI issuer (or contract through a payment aggregator / payment gateway) against the sale of goods and services, including financial services.

2.9 Net-worth: 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 compulsorily convertible preference shares 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 share capital at any time.

3. Eligibility to issue semi-closed and open system PPIs

3.1 Banks which comply with the eligibility criteria, including those stipulated by the respective regulatory department of RBI, shall be permitted to issue semi-closed and open system PPIs, after obtaining approval from RBI.

3.2 Non-bank entities which comply with the eligibility criteria, including those stipulated by the respective regulatory department of RBI, shall be permitted to issue only semi-closed system PPIs, after obtaining authorization from RBI.

4. Capital and other eligibility requirements

4.1 All entities (both banks and non-banks), regulated by any of the financial sector regulators and seeking approval / authorisation from the RBI under the PSS Act, shall apply to Department of Payment and Settlement Systems (DPSS), RBI, Central Office, Mumbai along with a ‘No Objection Certificate’ from their respective Regulator, within 45 days of obtaining such clearance.

4.2 Non-bank entities applying for authorisation shall be a company incorporated in India and registered under the Companies Act 1956 / Companies Act 2013.

4.3 Non-bank entities having Foreign Direct Investment (FDI) / Foreign Portfolio Investment (FPI) / Foreign Institutional Investment (FII) shall also meet the capital requirements as applicable under the extant Consolidated FDI policy guidelines of Government of India.

4.4 The Memorandum of Association (MOA) of the applicant non-bank entity shall cover the proposed activity of operating as a PPI issuer.

4.5 All non-bank entities seeking authorisation from RBI under the PSS Act shall have a minimum positive net-worth of Rs. 5 crore as per the latest audited balance sheet at the time of submitting the application. These entities shall submit a certificate in the enclosed format (Annex-2) from their Chartered Accountants (CA) to evidence compliance with the applicable net-worth requirement while submitting the application for authorisation. The application shall be processed by RBI based on this net-worth which shall be maintained at all times. Thereafter, by the end of the third financial year from the date of receiving final authorisation, the entity shall achieve a minimum positive net-worth of Rs. 15 crore which shall be maintained at all times. Illustratively, if an entity is issued final authorisation on March 1, 2018, then this entity shall achieve a minimum positive net-worth of Rs. 15 crore for the financial position as on March 31, 2020. Similarly, if an entity is issued final authorisation on May 1, 2018, then this entity shall achieve a minimum positive net-worth of Rs. 15 crore for the financial position as on March 31, 2021. Subsequently, the audited balance sheet and net-worth as on 31st March shall be submitted to RBI within six months of close of financial year, failing which the entity may not be permitted to carry out this business.

4.6 Newly incorporated non-bank entities which may not have an audited statement of financial accounts shall submit a certificate in the enclosed format (Annex-2) from their Chartered Accountants regarding the current net-worth along with provisional balance sheet.

4.7 All existing non-bank PPI issuers (at the time of issuance of this Master Direction) shall comply with the minimum positive net-worth requirement of Rs. 15 crore for the financial position as on March 31, 2020 (audited balance sheet). This shall be reported to RBI, along with CA certificate in the enclosed format (Annex-2) and audited Balance Sheet, by September 30, 2020 failing which the entity may not be permitted to carry out this business. Thereafter, the minimum positive net-worth of Rs. 15 crore shall be maintained at all times. Till such time, the existing PPI issuers shall continue to maintain the capital requirements applicable to them at the time of their authorisation.

4.8 All authorised non-bank entities shall submit a certificate in the enclosed format (Annex-2) from their Chartered Accountants to evidence compliance with the applicable net-worth requirement as per the audited balance sheet of the financial year within six months of completion of that financial year.

5. Authorisation Process

5.1 A non-bank entity desirous of setting up payment systems for issuance of PPIs shall apply for authorisation in Form A (available on RBI website) as prescribed under Regulation 3(2) of the Payment and Settlement Systems Regulations, 2008 along with the requisite application fees.

5.2 The applications shall be initially screened by RBI to ensure prima facie eligibility of the applicants. The directors of the applicant entity shall submit a declaration in the enclosed format (Annex-3). RBI shall also check ‘fit and proper’ status of the applicant and management by obtaining inputs from other regulators, government departments, etc., as deemed fit. Applications of those entities not meeting the eligibility criteria, or those which are incomplete / not in the prescribed form with all details, shall be returned without refund of the application fees.

5.3 In addition to the compliance with the applicable guidelines, RBI shall also apply checks, inter-alia, on certain essential aspects like customer service and efficiency, technical and other related requirements, safety and security aspects, etc. before granting in-principle approval to the applicants.

5.4 Subject to meeting the eligibility criteria and other conditions, the RBI shall issue an ‘in-principle’ approval, which shall be valid for a period of six months. The entity shall submit a satisfactory System Audit Report (SAR) to RBI within these six months, failing which the in-principle approval shall lapse automatically. SAR shall be accompanied by a certificate from the Chartered Accountant regarding compliance with the requirement of minimum positive net-worth of Rs. 5 crore. An entity can seek one-time extension for a maximum period of six months for submission of SAR by making a request in writing, to DPSS, Central Office, RBI, Mumbai, in advance with valid reasons. The RBI reserves the right to decline such a request for extension.

5.5 Subsequent to the issue of the in-principle approval, if any adverse features regarding the entity / promoters / group or business practices, etc., come to notice, the RBI may impose additional conditions and if warranted, the in-principle approval may be withdrawn.

5.6 Pursuant to receipt of satisfactory SAR and net-worth certificate, the RBI shall grant final Certificate of Authorisation. Entities granted final authorisation shall commence business within six months from the grant of Certificate of Authorisation failing which the authorisation shall lapse automatically. An entity can seek one-time extension for a maximum period of six months by making a request in writing, to DPSS, Central Office, RBI, Mumbai, in advance with valid reasons. The RBI reserves the right to decline such a request for extension.

5.7 The Certificate of Authorisation shall be valid for five years unless otherwise specified and shall be subject to review including cancellation of Certificate of Authorisation.

5.8 Entities seeking renewal of authorisation shall apply in writing to DPSS, RBI, Central Office, Mumbai at least three months before the expiry of validity of Certificate of Authorisation, failing which RBI reserves the right to decline the request for renewal.

5.9 Any proposed major change, such as changes in product features / process, structure or operation of the payment system, etc. shall be communicated with complete details, by way of a letter, addressed to the Chief General Manager, DPSS, RBI, Central Office, Mumbai. RBI shall endeavor to reply within 15 business days after receipt of above communication at DPSS, RBI, Central Office, Mumbai.

5.10 Any takeover or acquisition of control or change in management of a non-bank entity shall be communicated by way of a letter to the Chief General Manager, DPSS, RBI, Central Office, Mumbai within 15 days with complete details, including ‘Declaration and Undertaking’ (Annex-3) by each of the new directors, if any. RBI shall examine the ‘fit and proper’ status of the management and, if required, may place suitable restrictions on such changes.

6. Safeguards against Money Laundering (KYC / AML / CFT) Provisions

6.1 The Know Your Customer (KYC) / Anti-Money Laundering (AML) / Combating Financing of Terrorism (CFT) guidelines issued by the Department of Banking Regulation (DBR), RBI, in their “Master Direction – Know Your Customer (KYC) Directions” updated from time to time, shall apply mutatis mutandis to all the entities issuing PPIs and their agents.

6.2 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 all PPI issuers. All entities shall put in place necessary systems to ensure compliance with these guidelines.

6.3 PPI issuers shall maintain a log of all the transactions undertaken using the PPIs for at least ten years. This data shall be made available for scrutiny to RBI or any other agency / agencies as may be advised by RBI. The PPI issuers shall also file Suspicious Transaction Reports (STRs) to Financial Intelligence Unit-India (FIU-IND).

7. Issuance, loading and reloading of PPIs

7.1 All entities approved / authorised to issue PPIs by RBI are permitted to issue reloadable or non-reloadable PPIs depending upon the permissible type / category of PPIs as laid down in paragraph 9 and 10 of these Directions.

7.2 PPI issuers shall have a clear laid down policy, duly approved by their Board, for issuance of various types / categories of PPIs and all activities related thereto.

7.3 PPI issuers shall ensure that the name of the company which has received approval / authorisation for issuance and operating of PPIs, is prominently displayed along with the PPI brand name in all instances. The authorised entities shall also regularly keep RBI informed regarding the brand names employed / to be employed for their products.

7.4 PPI issuers shall ensure that no interest is payable on PPI balances.

7.5 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). The electronic loading / reloading of PPIs shall be through above payment instruments issued only by regulated entities in India and shall be in INR only.

7.6 Cash loading to PPIs shall be limited to Rs.50,000/- per month subject to overall limit of the PPI.

7.7 The PPIs may be issued as cards, 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 this Master Direction except for Meal Paper Vouchers where separate timeline has been indicated.

7.8 Banks shall be permitted to issue and reload PPIs at their branches, ATMs and through their BCs appointed as per the guidelines issued by RBI in this regard.

7.9 Banks and non-banks shall be permitted to issue and reload such payment instruments through their authorised outlets or through their authorised / designated agents subject to following conditions:-

1. There shall be a Board approved policy clearly laying down the framework for engaging agents for the purpose of issuance and reloading of PPIs.
2. Issuers shall carry out proper due diligence of the persons appointed as authorised / designated agents for issue / reloading of permissible categories of PPIs.
3. Issuers shall be responsible for all the PPIs issued by the authorised / designated agents.
4. Issuers shall be responsible as the principal for all acts of omission or commission of their authorised / designated agents, including safety and security aspects.
5. 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.
6. The PPI issuers shall regularly monitor the activities of their authorised / designated agents and also carry out a review of the performance of various agents engaged by them at least once in a year.
7. Issuers and their authorised / designated agents shall ensure adherence to applicable laws of the land, including KYC / AML / CFT norms as indicated in paragraph 6.

7.10 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 BCs of bank/s, intermediary for payment aggregation, payment gateway facility, etc.

7.11 PPIs under co-branding arrangements:

1. 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 lay down the roles, responsibilities and obligations of each co-branding partner.
2. The co-branding partner shall be a company incorporated in India and registered under the Companies Act 1956 / Companies Act 2013. In case the co-branding partner is a bank, then the same shall be a bank licensed by RBI.
3. PPI issuers shall carry out due diligence in respect of the co-branding partner to protect themselves against the reputation risk they are exposed to in such an arrangement. In case of proposed tie up with a financial entity, they may ensure that that entity has the approval of its regulator for entering into such arrangement.
4. The instructions / guidelines on KYC / AML / CFT (as indicated in paragraph 6) shall be adhered to, in respect of all PPIs issued under the co-branding arrangement as well.
5. The PPI issuer shall be liable for all acts of the co-branding partner. The Issuers shall also be responsible for all customer related aspects of the PPIs.
6. PPI issuers shall be permitted to co-brand such instruments with the name / logo of the company for whose customers / beneficiaries such co-branded instruments are to be issued.
7. The name of PPI issuer shall be prominently visible on the payment instrument.
8. In case of 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.
9. All non-bank PPI issuers desirous of issuing such co-branded PPIs shall seek one time approval from DPSS, RBI, Central Office. Separate approval is not required for each co-branding arrangement.
10. In case of co-branding arrangements between bank and non-bank entity, the bank shall be the PPI Issuer. The role of the non-bank entity shall be limited to marketing / distribution of the PPIs or providing access to the PPI holder to the services that are offered.
11. In case of co-branding arrangement between two banks, then the PPI issuing bank shall ensure compliance to above instructions.
12. Bank PPI issuers shall also adhere to the instructions contained in the circular DBOD.No.FSD.BC.67/24.01.019/2012-13 dated December 12, 2012, as amended from time to time.

7.12 All PPI issuers already having co-branding arrangements at the time of issuance of this Master Direction shall review their existing arrangements to meet the above requirements on or before December 31, 2017. The details of all the existing co-branding arrangements by all PPI issuers shall be reported to DPSS, RBI, Central Office, Mumbai within one month of release of this Master Direction in the format enclosed (Annex-4). Further, any new arrangement shall also be reported to RBI within seven days of finalisation of arrangement.

7.13 Prepaid meal instruments: Banks and non-bank entities issuing PPIs in the form of prepaid meal instruments, shall ensure that these are issued only as semi-closed PPIs, are in electronic form and reloadable. No cash withdrawal or funds transfer shall be permitted from such instruments. Such PPIs need not be issued as a separate category of PPI. No prepaid meal instruments in paper voucher form shall be issued after December 31, 2017.

7.14 There shall be no remittance without compliance to KYC requirements. PPI issuers, including their agents, shall not create new PPIs each time for facilitating cash-based remittances to other PPIs / bank accounts. PPIs created for previous remittance by the same person shall be used.

8. Cross-Border Transactions

The use of INR denominated PPIs for cross border transactions shall not be permitted except as under:

8.1 PPIs for cross-border outward transactions

1. KYC compliant reloadable semi-closed and open system PPIs issued by banks having AD-I licence shall be permitted to be used in cross-border outward transactions (only for permissible current account transactions under FEMA viz. purchase of goods and services), subject to adherence to extant norms governing such transactions.
2. PPIs shall not be used for any cross-border outward fund transfer and/or for making remittances under the Liberalised Remittance Scheme. Prefunding of online merchant’s account shall not be permitted using such Rupee denominated PPIs.
3. Issuers shall enable the facility of cross-border outward transactions only on explicit request of the PPI holders and shall apply a per transaction limit not exceeding Rs.10,000/-, while per month limit shall not exceed Rs. 50,000/- for such cross-border transactions.
4. In case this facility is made available by issuing the PPI in card form, then this PPI shall be EMV Chip and PIN compliant.
5. Such PPIs need not be issued as a separate category of PPI.

8.2 PPIs for credit towards cross-border inward remittance

1. 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 remittance under the Money Transfer Service Scheme (MTSS) of the RBI.
2. Authorised non-bank PPI issuers shall be permitted to issue such PPIs for a period of three years, from the date of this Master Direction, subject to review.
3. The PPIs shall be KYC compliant, reloadable and issued only in electronic form, including cards.
4. Such PPIs shall be issued in adherence to extant norms under the MTSS Guidelines issued by Foreign Exchange Department, RBI.
5. Amounts only upto Rs.50,000/- from individual inward MTSS remittance shall be permitted to be loaded / reloaded in PPIs issued to beneficiaries. Amount in excess of Rs.50,000/- under MTSS shall be paid by credit to a bank account of the beneficiary. Full details of the transactions shall be maintained on record for scrutiny.
6. 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.
7. Such PPIs need not be issued as a separate category of PPI.

Read More by clicking on following link

Master guidelines on Preapaid cards