Context

Recently a committee was set up to review the Customer Service Standards in RBI Regulated Entities has recommended that “ the central bank should examine the extension of Deposit Insurance and Credit Guarantee Corporation (DICGC) cover Prepaid Payment Instrument (PPI) to , which, at present, is available only to bank deposits.“

About Prepaid Payment Instrument (PPI):

• PPIs are instruments that facilitate the purchase of goods and services, conduct of financial services and enable remittance facilities, among others, against the money stored in them.
• PPIs can be issued as cards or wallets.
• There are two types of PPIs – small PPIs and full-KYC (know your customer) PPIs.
• Further, small PPIs are categorized as – PPIs up to Rs.10,000 (with cash loading facility) and PPIs up to Rs.10,000 (with no cash loading facility).
• PPIs can be loaded/reloaded by cash, debit to a bank account, or credit and debit cards.
• The cash loading of PPIs is limited to 50, 000 per month subject to the overall limit of the PPI.

Who can issue PPI instruments?

• PPIs can be issued by banks and non-banks after obtaining approval from the RBI.
• As on November 9, 2022, over 58 banks including Airtel Payments Bank, Axis Bank, Bank of Baroda, Jio Payments Bank, Kotak Mahindra Bank, Standard Chartered Bank, UCO Bank and Union Bank have been permitted to issue and operate prepaid payment instruments.

What has the RBI committee recommended?

• The committee mentioned that the RBI has authorised a number of banks and non-banks entities to issue PPIs in the country.
• The money kept in wallets is in the nature of deposits.
• However, currently, the DICGC cover extends only to bank deposits.
• Being deposits with the PPI issuers who are also regulated by the Reserve Bank, extending deposit insurance to the PPI segment needs examination, the RBI-appointed committee recommended.