–Download a copy of the RBI draft master directions here.

The Reserve Bank of India has released a draft Master Direction on Prepaid Payment Instruments (PPIs), 2026, for public comments, replacing its August 2021 framework. PPIs are payment instruments such as wallets and prepaid cards that let users load money in advance and spend it later. The directions will apply to all PPI issuers and system participants once notified. RBI has opened the draft up for comments till May 22, 2026.

Who can issue PPIs?

• Banks: Banks allowed to issue debit cards can issue PPIs after informing the RBI’s Department of Payment and Settlement Systems (DPSS).
• Non-banks: Must apply through the RBI’s online portal.
• They must be a company incorporated in India under the Companies Act.
• The Memorandum of Association must cover PPI issuance.
• Regulated entities must submit a No Objection Certificate (NOC) from their regulator within 45 days.
• RBI may grant authorisation on a perpetual basis.
• Incomplete applications or those below the minimum net worth will be returned.
• Non-bank issuers with Foreign Direct Investment (FDI) must follow India’s FDI policy and forex rules.
• Changes in control or management need prior approval under RBI rules.

Capital requirements

• Minimum net worth: Rs 5 crore.
• Net worth after three financial years of authorisation: Rs 15 crore.
• Issuers must maintain minimum net worth on an ongoing basis.

Governance

• Promoters and directors must have financial integrity, a good reputation, and honesty.
• Cannot have convictions involving moral turpitude, economic offences, or RBI-administered laws.
• Cannot be insolvent and undischarged.
• Cannot be barred by a regulator from accessing financial systems.
• Cannot be declared of unsound mind by a court.
• Must be financially sound.

Issuance and loading

• PPIs may be issued as cards, wallets, or similar instruments.
• Paper vouchers are not allowed.
• PPIs may be loaded via bank account debit, another PPI, or cash.
• Special Purpose PPIs may also be loaded by credit card.
• Banks may load PPIs through Business Correspondents (BCs).
• Non-banks may load PPIs through agents in person.
• Issuers cannot pay interest on PPI balances.
• Cross-border use is not permitted.

Co-branding

• Issuers may partner with:
  • Other PPI issuers
  • Scheduled commercial banks
  • Companies incorporated in India
  • Government departments, ministries, or institutions
• Co-branding partners can only market or distribute.
• PPI issuer remains liable for the partner’s actions.

Types of PPIs:

Full-KYC PPI

• Only one per holder at a time.
• Minimum validity: one year.
• Maximum outstanding balance: Rs 2 lakh.
• Monthly debit limit: Rs 2 lakh.
• P2P transfer limit: Rs 25,000/month.
• Cash loading limit: Rs 10,000/month.
• Cash withdrawal allowed as per RBI rules.

Small PPI

• Issued with minimum details if full KYC is not completed.
• Requires OTP-verified mobile number and self-declared identity.
• Maximum validity: two years.
• Can be converted to full KYC during validity.
• Only one per holder; no re-issuance after expiry.
• Maximum outstanding balance: Rs 10,000.
• Monthly debit limit: Rs 10,000.
• Only for the purchase of goods or services.
• No cash withdrawal or P2P transfers.

Special Purpose PPIs:

Gift PPI

• Maximum value: Rs 10,000.
• Cannot be bought in cash.
• Maximum validity: one year.
• Non-reloadable.
• No cash withdrawal or P2P transfers.

Transit PPI

• No KYC needed.
• Maximum outstanding balance: Rs 3,000.
• No withdrawal, refund, or fund transfer.
• May have perpetual validity.

PPI for foreign nationals/NRIs (UPI One World)

• Issued after physical passport and visa verification.
• Only for merchant payments during stay in India.
• Can be loaded with foreign exchange in cash or other instruments.
• Monthly debit limit: Rs 5 lakh.
• Must be closed when the visa expires: the balance is refunded to the source and may be refunded in foreign currency.

Expiry, inactivity, closure and refunds

• Non-transit PPIs become inactive after one year without financial transactions.
• Must be closed after another one year unless reactivated.
• Issuers must notify holders during the 45 days before expiry or inactivity.
• Holders can request closure at any time.
• The outstanding balance must be transferred back to the source or to a verified bank account upon expiry, inactivity, closure, or surrender of authorisation.
• Refunds for failed, returned, rejected, or cancelled transactions must be credited immediately.
• Such refunds can exceed category limits.
• Refunds from transactions done through other payment instruments cannot be credited to PPIs.

Customer protection and dispute management

• Issuers must disclose features, charges, validity, and terms clearly.
• Disclosures should preferably be in English, Hindi, and the local language.
• Issuers must publish a grievance redressal framework.
• Must appoint a nodal officer.
• Must disclose escalation matrix and turnaround times.
• Agents cannot charge customers.
• Customers can approach RBI’s Integrated Ombudsman Scheme.
• Issuers must follow RBI rules on failed transactions and online dispute resolution.
• Customer liability limits for unauthorised transactions apply in accordance with the Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Directions, 2025, except for offline payments.

Escrow accounts

• Non-bank issuers must keep collected funds in a separate INR escrow account with a scheduled commercial bank in India.
• Escrow funds can only be used for authorised PPI business.
• No co-mingling with other business funds.
• One additional escrow account may be maintained in another bank.
• An auditor certificate is required for inter-escrow transfers.
• Day-end escrow balance must not be lower than outstanding PPIs and dues to acquirers.
• Statutory auditors must certify this quarterly.
• No interest on escrow balances except on the core portion.
• The core portion is calculated using the average of the lowest monthly outstanding balances over the previous 12 months.
• Only issuers in business for at least 12 months can earn interest on the core portion.

Also read

• Extra safeguard for the elderly: RBI suggests trusted person approval for high-value digital payments
• RBI mulls bringing e-commerce marketplaces within its regulatory ambit: Payments Vision 2028 report
• Explained: RBI’s Draft Amendments for Bank Policies and Customer Protection in Fraudulent Digital Transactions