RBI issues guidelines on pre-paid payment instruments

04 May 2009

The Reserve Bank of India (RBI) has issued guidelines for regulation and supervision of the system of issuance of pre-paid payment instruments in the country and to ensure development of the payment and settlement systems in a prudent and customer friendly manner.

These guidelines lay down the eligibility criteria and the basic conditions for payment system operators involved in the issuance of pre-paid payment instruments in the country.

All persons seeking to operate payment systems involved in the issuance of pre-paid payment instruments in India shall comply with these guidelines, RBI said in a release.

''All persons proposing to operate payment systems involved in the issuance of prepaid payment instruments shall seek authorisation from the department of payment and settlement systems, Reserve Bank of India, under the Payment and Settlement Systems Act, 2007,'' RBI said in a notification.

All persons currently operating such payment systems shall comply with the guidelines within three months from the date of issuance of these guidelines.

Banks and non-bank entities have been issuing pre-paid payment instruments in the country. Hitherto only banks proposing to issue pre-paid payment instruments were approaching Reserve Bank for authorisation. Consequent to the passing of Payment and Settlement Systems Act 2007, all persons currently operating payment systems involved in the issuance of pre-paid payment instruments and those proposing to operate such systems would have to approach Reserve Bank for authorisation. In the emerging scenario, it is imperative to have a set of guidelines for pre-paid payment instruments that would cover both banks and non-bank persons, to ensure orderly development and operation of pre-paid payment instruments in the country. Reserve Bank of India has, therefore, brought out these operating guidelines. These guidelines lay down the basic eligibility criteria and the conditions for operating such payment systems in the country.