The Reserve Bank of India (RBI) on Thursday released a statement on Development and Regulatory Policies in which it proposed to introduce a new type of prepaid payment instrument (PPI) that could be used only for transactions of goods and services worth up to Rs 10,000.

“Prepaid Payment Instruments (PPIs) have been playing an important role in promoting digital payments. To further facilitate its usage, it is proposed to introduce a new type of PPI which can be used only for purchase of goods and services up to a limit of Rs 10,000. The loading /reloading of such PPI will be only from a bank account and used for making only digital payments such as bill payments, merchant payments, etc. Such PPIs can be issued on the basis of essential minimum details sourced from the customer,” RBI’s policy statement read.

The RBI further said that instructions on this regard will be released by December 31, 2019.

PPIs can be loaded and reloaded by cash or debit to a bank account or by credit card or from other PPIs up to a limit of Rs 50,000 per month. As of now, banks and non-bank entities are permitted to issue and reload such payment instruments.

There are currently three kinds of PPIs allowed by RBI closed system PPIs, semi-closed system PPIs and open system PPIs. Some of the popular examples of PPIs are—Paytm, Mobikwik (semi-closed system PPIs), Gift card (closed system PPIs), Travel/Debit/credit cards (open system PPIs).

The banking regulator also announced to allow the International Financial Service Centre Banking Units (IBUs) to open foreign currency current accounts of their corporate borrowers in order to facilitate ease of operations.

As regard to liquidity coverage ratio, it has also allowed the IBUs to accept fixed deposits in foreign currency of less than one year tenor from non-bank entities and consequently remove the current restriction on premature withdrawal of deposits.

“However, the current prohibition on acceptance of retail deposits including from high net worth individuals (HNIs) will continue. Necessary instructions are being issued shortly,” the RBI said.

The Reserve Bank also put forth the reviewed foreign exchange hedging facilities allowing users to undertake over the counter (OTC) currency derivative transactions up to USD 10 million, without the need to evidence underlying exposure.

“Banks shall be provided with the discretion, in exceptional circumstances, to pass on net gains on hedge transactions booked on anticipated exposures. Strengthening of the safeguards to ensure, that complex derivatives are sold only to users that are capable of managing the risks,” the RBI said.

The final directions in this regard will be issued after notification of the changes to Foreign Exchange Management Act (FEMA) Regulations, RBI said in the ‘Statement on Developmental and Regulatory Policies’.

(With input from agencies)