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RBI sets new norms for pre-paid cards

The objective is to make all issuers comply with the strict money laundering laws and all the relevant KYC norms

April 05, 2014 10:36 IST | India Infoline News Service
The Reserve Bank has tightened the norms regarding issuance of pre-paid payment instruments and capped their maximum limit to Rs 50,000.

"The developments in the pre paid payment instrument segment have necessitated a comprehensive review of guidelines issued so far," RBI said in a notification. on Friday, adding that the maximum balance of any such instrument should not exceed Rs. 50,000.

It said the objective is to make all issuers comply with the strict money laundering laws and all the relevant KYC norms. No card can be issued without verifying the KYC of the issued party, it added.

The name of the issuer shall be visible prominently on the payment instrument. Banks/NBFCs/other persons desirous of issuing such co branded prepaid instruments need to seek one time approval from RBI, it said.

The RBI said the new norms will provide a framework for regulation and supervision of persons operating pre-paid payment systems and also ensure development of this segment in a prudent and customer friendly manner.

The new norms also extend the definition of pre paid card by including Internet wallets, mobile accounts, mobile wallets, paper vouchers and any such instrument which can be used to access the pre paid amount.

On the capital requirements for non bank, non NBFC issuers, the RBI said they will have a minimum paid up capital of Rs 500 lakh and minimum positive net worth of Rs 100 lakh at all the times.

It also capped the validity of any pre paid gift instruments at one year and also barred issuers from reloading the card.

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