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RBI Mandated PPIs Interoperability by March 2022; Increased the Limit from Rs 1 lakh to Rs 2 lakhs for Full-KYC PPIs

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PPIs issued by banks and non-banks shouldOn May 19, 2021, Under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007, The Reserve Bank of India (RBI) has mandated that all prepaid payment instruments (PPIs) or mobile wallets such as Paytm, PhonePe and Mobikwik that are fully KYC-compliant be made interoperable by March 31, 2022.


Under the Bi-monthly monetary policy in April 2021, to incentivise the migration of PPIs to full-KYC, the RBI proposed the following measures.

  • Proposed to make interoperability mandatory for full-KYC PPIs
  • To increase the limit of outstanding balance PPIs from Rs 1 lakh to Rs 2 lakh
  • Proposed to allow the facility of cash withdrawal for full-KYC PPIs of non-bank PPI issuers (subject to a limit).

About RBI’s Regulations over PPIs in brief:

a.Mandating Interoperability by March 31, 2022:

i.RBI made it mandatory for PPI issuers to give the holders of full-KYC PPIs (KYC-compliant PPIs) interoperability through authorised card networks (for PPIs in the form of cards) and Unified Payments Interface (UPI) (for PPIs in the form of electronic wallets). Interoperability on the acceptance side also became mandatory.

ii.RBI stated the interoperability amongst PPIs issued by banks and non-banks to be enabled by March 31, 2022(within FY22).

iii.RBI has made PPIs for Mass Transit Systems (PPI-MTS) remain exempted from interoperability and gave the option for Gift PPI issuers to offer interoperability.

b.Increasing the Limit to ₹2 lakh for Full-KYC PPIs

The maximum amount outstanding in full-KYC PPIs (KYC-compliant PPIs) has been increased from Rs 1 lakh to Rs 2 lakhs by RBI.

c.Permitting Cash Withdrawal from Full-KYC PPIs of Non-Bank PPI Issuers

i.RBI permitted Cash withdrawal from full-KYC PPIs issued by non-bank PPI issuers with a Maximum limit of Rs 2,000 per transaction with an overall limit of Rs 10,000 per month per PPI.

ii.All cash withdrawal transactions performed using a card/wallet, should be authenticated by an Additional Factor of Authentication (AFA) / PIN.

iii.To reduce the risk of fraudulent use of PPIs, the PPI issuers shall place suitable cooling periods for cash withdrawal (opening the PPIs or loading/re-loading funds into PPIs).

iv.Proper customer redressal mechanisms should be placed by any PPI issuer who offering this facility.

Note – Currently, the cash withdrawal is allowed only for full-KYC PPIs issued by banks, such as debit and credit cards. Now with these new measures, even a payments wallet or a prepaid card can be used to withdraw cash at ATMs, micro-ATMs and eligible Point of Sale (PoS) terminals.

Recent Related News:

On April 7, 2021, RBI extended the membership of Centralised Payment Systems (CPSs) facilities such as National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) to non-bank payment system operators.

About Prepaid Payment Instruments (PPIs):

PPIs are payment instruments that facilitate the purchase of goods and services, including financial services, remittance facilities, etc., against the value stored on such instruments.

PPIs are classified into 3 types such as,

  • Closed System PPIs
  • Semi-closed System PPIs, and
  • Open System PPIs.