Semi-Closed Wallet Registration
Semi-Closed Wallet Registration with RBI
Semi-Closed Wallet Registration – All non-banking entities looking to issue such instruments shall seek authorization from RBI under the Payment and Settlement Systems Act of India, 2007. Banks and Registered NBFC’s seeking to issue such instruments shall seek approval from Department of Payment & Settlement’s system, RBI.
What are They?
- Payment Instruments which are redeemable at a group of clearly identified merchant’s locations which contracts especially with issuers in order to accept the payment instruments.
- These instruments do not permit Cash withdrawal or redemption by the holder.
- All other entities must have minimum NOF of 10 lakhs.
- RBI has issued various safeguards for AML/CFT/KYC norms for mitigating risks in relation to anti-money Necessary systems are put in place to align compliance guidelines.
- Maximum Value of any PPI shall not cross more than 50000/-
- Semi-closed payment instruments issued up to 1000/- can be done without KYC subject to reporting of transactions and turnover. More than one card should not be issued to the same person.
- PPI up to 5000 can be issued be accepting ‘Aadhaar’ or PAN as proof, but this won’t let withdrawal happen.
- Semi-closed Prepaid payment instruments which permit only payment of utility bills/ essential services up to a limit of Rs. 10,000/- can be issued without any KYC being undertaken by the issuer. The entities issuing such instrument may ensure that these instruments are made acceptable only at institutions which maintain the identity of the customers. The utility bills/ essential services shall include only Electricity bills, water bills, telephone/mobile phone bills, and insurance premium, cooking gas payments, ISP for Internet/Broadband Connections, Cable/DTH subscriptions and Citizen Services by Government or Government bodies.
Also, Entities issuing prepaid payment instruments shall maintain a log of all the transactions undertaken using these instruments. The database should be available for scrutiny by the Reserve Bank or any other agency/agencies as may be advised by the Reserve Bank. These entities should also file Suspicious Transaction Report (STR) to Financial Intelligence Unit – India (FIU-IND).
The prepaid payment instruments issuers shall put in place adequate information and data security infrastructure, and systems for the prevention and detection of frauds. It is advisable to build a centralized database to prevent multiple purchases of payment instruments at different locations, leading to circumvention of limits if any prescribed for such payment instruments. Semi-Closed Wallet Registration
End-Use Fund Utilisation
Semi-Closed Wallet Registration In order to ensure timely settlement, issuers shall invest the funds provided therein.
- For banks and non-banking financial companies, the outstanding balances shall be part of the net demand and time liabilities for the purpose of maintenance of reserve requirements. This position will be computed on the basis of the balances appearing in the books of the bank as on the date of reporting.
- Other entities issuing payment instruments (except those exempted from the purview of the guidelines) are permitted to maintain their outstanding balance in an escrow account with any scheduled commercial bank subject to the following conditions:
● interest is payable by the bank on such balances.
● A quarterly certificate from the auditors shall be submitted certifying, the entity has been maintaining adequate balances in the account to cover the outstanding volume of payment instruments issued.
● The entity shall also submit an annual certificate, as above, coinciding with the accounting year of the entity to the Reserve Bank of India.
● Adequate records indicating the daily position of the value of instruments outstanding vis-à-vis balances maintained with the banks in the escrow accounts shall be made available for the scrutiny to the Reserve Bank or the bank where the account is maintained on demand.
- All prepaid payment instruments issued in the country shall have a minimum validity period of 6 months from the date of issuance to the holder.
- In case of non-reloadable PPI’s, the transfer of outstanding amount at the expiry of the validity of the instrument to a new similar PPI of the same issuer purchased by the holder may be
- Holders of PPI’s in closed or semi-closed systems shall be permitted to redeem the balance in the o/s within the expiry date if for any reason the scheme is wound up or is discontinued by RBI.
- In any case, the redemption should not exceed the face value of the PPI.
Consumer Grievance Redressal Mechanism