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The Reserve Bank of India regulates Prepaid Payment Instruments or PPI Licences under Section 10(2) of the PSS Act, which empowers the RBI to issue guidelines regularly for efficient management of payment systems. The Master Directions on Prepaid Payment Instruments (PPIs) issued by the RBI also apply to banks and non-banks that wish to set up a PPI system in India.
Table of Contents
The RBI’s Master Directions lays down the eligibility criteria and the conditions of use for Payment System Operators (PSOs) involved in issuing licences and PPIs in the country. The requirements for obtaining a PPI Licence/ Payment Wallet Licence are the following:
The following documents are required for getting PPI Licence:
The following steps are listed below for getting a PPIs Licence/ Prepaid Wallet Licence:
Step-1: Make an Application in Form A for approval as the prescribed format under Regulation 3(2) of the PSSRegulations, 2008, with the requisite government fee, and all relevant documents have to be furnished before the Reserve Bank of India for obtaining the PPI Licence.
Step-2: The RBI proceeds with the Screening process to ensure an applicant’s PPI Licence eligibility requirements.
Step-3: RBI checks on certain essentials like customer service efficiency, safety and security standards, and technical aspects for ascertaining the requirements for the application.
Step-4: After satisfying all the eligibility criteria and ‘fit & proper’ status, RBI issues an ‘in-principle approval’, which stands valid for 6 months from the date of approval.
Step-5: The Company must submit an Audit Report from the Chartered Accountant to the Reserve Bank of India within 6 months. The Company must submit the System Audit Report (SAR); otherwise, automatic in-principal approval will lapse. The Company may get an extension (only one extension) of six months by making an advance appeal stating all the valid reasons.
Step-6: After verifying all the credentials of the particulars furnished by entities, the Company will be granted final approval. The PPIs Licence Holder must commence business within six months of receiving the Certificate of Authorization for the PPI Licence.
RBI’s new directions focus more on building a resilient PPI framework for mitigating frauds and misuse of PPIs. The guidelines and rules must be followed diligently to obtain the PPI licence.
Read our Article: How to obtain a Prepaid Wallet License in India?
Raghvendra Sonker has completed his Graduation from Gujarat National Law University. He has a keen interest in legal drafting, writing articles, and research papers. His core interest areas are Banking and Financial Issues.
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