What changed
The maximum value for semi-closed prepaid instruments issued against any identity document (without full KYC) was increased from Rs 1,000 to Rs 2,000. Additionally, the list of utility bills and services for which semi-closed instruments up to Rs 10,000 can be issued without separate KYC was expanded to include electricity, water, telephone/mobile, insurance premium, cooking gas, broadband/cable/DTH rentals, and government citizen services, along with existing categories like college fees, school fees, government taxes, air and train travel.
What it means for you
Banks and non-bank prepaid instrument issuers can now offer higher-value semi-closed prepaid cards with simplified KYC, potentially boosting adoption for small-value transactions. The expanded utility bill list opens up new merchant acceptance opportunities, especially for recurring payments, but issuers must ensure that accepting merchants maintain full customer identity records.
What you must do
- Update system limits for semi-closed prepaid instruments to allow issuance up to Rs 2,000 without full KYC.
- Expand merchant onboarding to include broadband, cable/DTH, and government citizen services for Rs 10,000 instruments.
- Ensure that all accepting merchants for Rs 10,000 instruments maintain full customer identity records.
- Review and update internal KYC and reporting processes to track annual turnover and suspicious transactions for the new limits.
Who it affects
All system providers and system participants issuing prepaid payment instruments, Banks offering semi-closed prepaid cards, Non-bank prepaid instrument issuers, Merchants accepting prepaid instruments for utility bills and services
What is the new limit for semi-closed prepaid instruments without full KYC?
The limit has been raised from Rs 1,000 to Rs 2,000, as per the amendment to Para 6.4(i) of the April 27, 2009 guidelines.
Which new services are now eligible for Rs 10,000 semi-closed instruments without separate KYC?
The expanded list includes electricity, water, telephone/mobile, insurance premium, cooking gas, broadband/cable/DTH rentals, and government citizen services, in addition to existing categories like college fees, school fees, government taxes, air and train travel.
Do issuers need to conduct separate KYC for these Rs 10,000 instruments?
No, separate KYC by the issuer is not required, but the issuer must ensure that the accepting merchants maintain full identity of the customers.