RBI’s move to issue prepaid instruments, a fillip to cash replacement and digital transactions

moneycontrol.com

Hiral Thanawala



The Reserve Bank of India (RBI) announced that a new Prepaid Payment Instrument (PPI) would be rolled out. This can be used for purchasing goods and services of up to Rs 10,000. Says Murali Nair, President of Zeta’s Banking Business, “This is the most encouraging cash replacement action that RBI has taken in recent times. This will bring on board new customers that stayed away from digital payments.”

Bank backing : A PPI is issued with the backing of a bank as the sponsor. The amount can be loaded in a new PPI only from your bank account. Adds Nair, “RBI should allow PPIs to be intermediaries for digitally distributing these new cards. They can scale up and encourage customers to opt for it.” These PPIs can be issued on the basis of minimum details sourced from the customer.

A retail banker requesting anonymity says, “For starters, we are considering new PPIs as a virtual card, but a physical card can also be considered later.”
Mrutyunjay Mahapatra, MD and CEO, Syndicate Bank says, “The restriction of Rs 10,000 on this PPI gives RBI the ability to control the possibility of huge money laundering. This seems to be a well-calculated limit set by the RBI.” Also, using this new PPI, you will limit your risk exposure to Rs 10,000 while transacting online. RBI will issue further instructions in this regard by December 31.

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