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NEW RBI NORMS ON PREPAID PAYMENT INSTRUMENTS

The Reserve Bank of India (“RBI”) has issued various guidelines from time to time on issuance and operations of Prepaid Payment Instruments (“PPIs”) in India. PPIs are defined as payment instruments that facilitate purchase of goods and services, including financial services, remittance facilities, etc., against the value stored on such instruments, and can be classified under three types viz. (i) Closed System PPIs, (ii) Semi-closed System PPIs, and (iii) Open System PPIs.

In view of the numerous technological innovations, progress in fintech and the use of PPIs growing at an exponential rate, RBI with the aim to foster innovation and competition, safety, security, and customer protection, has issued a fresh set of directions relating to issuance and operations of PPIs on October 11, 2017, in the form of RBI (Issuance and Operation of Prepaid Payment Instruments) Directions, 2017 (“Master Directions”). These Master Directions are applicable to PPI Issuers, System Providers, and System Participants, and are effective immediately. Existing authorised PPI issuers have, however, been allowed till December 31, 2017 to comply with the revised requirements (except where otherwise specified in the Directions).

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