Report Writing

Draft Guidelines for issuance and operation of Prepaid Payment Instruments in India

A. Purpose

To provide a framework for the regulation and supervision of all the entities involved in issuance of Prepaid Payment Instruments in the country and to ensure orderly development of this segment of the payments and settlement system in a prudent and customer friendly manner.

B. Scope

These guidelines lay down the eligibility criteria and the basic conditions for issuance of prepaid payment instruments in the country. All entities seeking to issue prepaid payment instruments in India shall comply with these guidelines.

All non-bank entities proposing to issue such instruments, unless otherwise specifically exempted as per the guidelines, shall seek authorization from the Reserve Bank of India, under the Payment and Settlement System Act 2007.

Banks and Registered Non-Bank Financial Companies seeking to issue such instruments shall seek approval from the Department of Payment and Settlement Systems, Reserve Bank of India.

All entities currently issuing such instruments shall comply with the guidelines within three months from the date of issuance of these guidelines.

C. Structure

1. Introduction

2. Definitions

3. Eligibility

4. Exemption

5. Capital requirements

6. Safeguards against money laundering KYC/AML/CFT provisions

7. Deployment of Money collected

8. Issuance and reloading of prepaid payment instruments

9. Validity

10. Redemption

11. Fraud prevention and Security standards

12. Customer Protection Issue

1. Introduction

1.1 Banks and non-bank entities have been issuing prepaid payment instruments in the country. Hitherto only banks proposing to issue prepaid payment instruments were approaching Reserve Bank for authorization. Consequent to the passing of Payment and Settlement systems, Act 2007, all non-bank entities currently issuing prepaid payment instruments and those proposing to issue such payment instruments would have to...