RBI Tightens Pre-paid Card Norms
With pre-loaded credit cards gaining popularity, the Reserve Bank of India has tightened norms with regards to their issuance and put a cap of ` 50,000 on their maximum value.
“The developments in the prepaid payment instrument segment had necessitated a comprehensive review of guidelines issued so far,” the central bank said.
The last time it issued these norms was in April 2009, under Section 18 of the Payment and Settlement Systems Act of 2007.
As per the new conditions, which will supersede the existing norms, the maximum validity of the prepaid instruments shall be one year, and the maximum value of such instruments shall not exceed ` 50,000.
These instruments will not be reloadable, nor will cash withdrawals be permitted, RBI said, adding that full KYC (know your customer details) of the people who buy these instruments will need to be maintained by the banks, non-banking financial institutions and other entities.
Further, the non-bank and non-NBFC issuers would need to have a networth of ` 1 crore and a minimum paid-up capital of ` 5 crore at all times, compared to the earlier requirement of a minimum ` 1 crore networth and positive net owned funds, it said.
RBI’s objective behind the revised norms is to make all issuers comply with the strict money laundering laws and all the relevant KYC norms.
Apart from tightening the norms, the definition of prepaid cards is also being expanded to include internet wallets, mobile accounts, mobile wallets and paper vouchers, all instruments that can be used to access the pre-loaded amount.
RBI has also made it clear that mobile-based prepaid instruments should only be launched by those banks that have a licence to provide mobile banking transactions.
Hindustan Times, New Delhi, 31-03-2014