RBI to mandate interoperability among prepaid payments instruments: Shaktikanta Das

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Mumbai: Making its displeasure on prepaid payments instruments issuers not adopting interoperability, the Reserve Bank on April 7 said it will make it mandatory for such companies to make provisions for letting their customers transact with others after doing a full-KYC (know your customer).

The central bank also doubled the maximum balance a single account in a payments bank can carry to Rs 2 lakh at the end of the day.

Governor Shaktikanta Das on Wednesday said prepaid payments instruments (PPIs) were given the option to become interoperable, wherein customers of one company can send funds to customers of other PPIs or banks, in 2018 in cases where a full KYC is done.

“Despite the passage of two years, migration towards full-KYC PPIs, and therefore interoperability, is not significant. It is, therefore, proposed to make interoperability mandatory for full-KYC PPIs and for all acceptance infrastructure,” Das said.

To incentivise the migration of PPIs to full-KYC, it is proposed to increase the limit of outstanding balance in such PPIs from the current level of Rs 1 lakh to Rs 2 lakh, he added.

Das said the RBI has been stressing on interoperability to optimally utilize the payment instruments like cards and wallets and also given the constraint of scarce acceptance infrastructure like point of sale devices, ATMs, QR codes, bill-payment touchpoints.

Necessary instructions in this regard will be issued separately, Das said, while announcing the first review of the RBI policy for this fiscal.

The RBI has also decided to permit the facility of cash withdrawal, subject to a limit, for full-KYC PPIs of non-bank PPI issuers as well as a confidence-building measure, Das said.

At present, the facility is allowed only for full KYC PPIs issued by banks through ATMs and Point of Sales terminals, which decreases a customer’s propensity to carry cash.

“The measure, in conjunction with the mandate for interoperability, will give a boost to migration to full-KYC PPIs and would also complement the acceptance infrastructure,” Das said.

Meanwhile, Das also said that membership to the RBI-operated Centralised Payment Systems (CPSs)—RTGS and NEFT—will be opened to non-banks like central bank-regulated payment system operators to take direct membership of the CPS.

“This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments,” Das added.

He noted that PPI issuers, card networks, white-label ATM operators, Trade Receivables Discounting System (TReDS) platforms, has grown in importance and volume by innovation over the last few years.

Instructions on this front will be announced soon, Das said, making it clear that non-banks allowed to become a member of CPS will not be eligible for any liquidity facility from the Reserve Bank to facilitate settlement of their transactions.