RBI exempts NBFCs issuing PPIs from Chapter IIIB of RBI Act
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2013-14/461 · issued FY 2013-14 · ~2 min read
Quick answerRBI exempts non-banking institutions authorised under PSS Act to issue prepaid payment instruments from Chapter IIIB of RBI Act, 1934, for money received for PPIs. This removes dual regulation for NBFCs in payments.
The rule, in the simplest words
If a non-bank company (NBFC) has permission from RBI to issue prepaid payment instruments (PPIs, like digital wallets or gift cards), then the money it collects for those PPIs is NOT treated as a 'deposit' under the RBI Act's Chapter IIIB (the chapter that has strict rules for taking deposits).
This rule only applies to money received specifically for issuing PPIs, not for any other business the company does.
The company must already be authorized under the Payment and Settlement Systems Act (PSS Act, a law for payment systems) to get this exemption.
This change removes double regulation (two sets of rules) for NBFCs that issue PPIs, making it simpler for them.
How it plays out — a real example
Priya, a compliance officer at an NBFC in Pune, reviews the new RBI notification. She sees that the money her company collects from customers for its digital wallet service is now exempt from deposit rules. She updates her internal manual to clearly separate PPI funds from other deposits, ensuring her team treats them correctly and avoids any confusion with the old rules.
What changed
RBI issued Notification No. DNBS.273/PCGM(NSV)-2014 on January 24, 2014, exempting non-banking institutions authorised under the Payment and Settlement Systems Act, 2007 to issue prepaid payment instruments from the provisions of Chapter IIIB of the RBI Act, 1934. The exemption is limited to money received specifically for issuing PPIs.
What it means for you
NBFCs and other non-banking entities that are authorised to issue PPIs no longer need to comply with Chapter IIIB requirements (like deposit regulations) for the funds collected for PPIs. This reduces regulatory overlap and compliance burden for entities already regulated under PSS Act. Banks and lenders dealing with such NBFCs should note that PPI-related funds are now outside the deposit framework.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Verify if your NBFC holds PSS Act authorisation for issuing PPIs to avail this exemption.
Ensure PPI-related funds are segregated and not treated as deposits under Chapter IIIB.
Update internal compliance manuals to reflect the exemption for PPI money.
Monitor RBI notifications for any changes to PSS Act or PPI guidelines.
Who it affects
Non-Banking Financial Companies (NBFCs) issuing PPIs, Non-banking institutions authorised under PSS Act, Payment system operators, RBI supervision departments
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 10:59 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Does this exemption apply to all money received by an NBFC?
No, the exemption is limited and restricted only to money received for the issue of prepaid payment instruments. Other funds remain subject to Chapter IIIB of the RBI Act.
What is Chapter IIIB of the RBI Act?
Chapter IIIB contains provisions related to acceptance of deposits by non-banking institutions, including reserve requirements and reporting. This exemption removes those requirements for PPI funds.
Do I need separate authorisation under PSS Act to issue PPIs?
Yes, the exemption applies only to non-banking institutions that are authorised to operate a payment system and issue PPIs under the Payment and Settlement Systems Act, 2007.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #75: DNBS(PD).CC.No.368/03.10.01/2013-14 — "Prepaid Payment Instruments issued by Non-Banking Institutions" dated January 24, 2014”
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/461
DNBS(PD).CC. No 368 /03.10.01 /2013-14
January 24 , 2014
All Non Banking Financial Companies
Dear Sirs,
Prepaid Payment Instruments issued by Non-Banking Institutions
Non–banking institutions (NBIs) are allowed to issue prepaid payment instruments (PPIs) and collect money in this behalf from the customers, subject to authorisation under the Payment and Settlement Systems Act (PSS Act), 2007. As this function involves providing payment service, and is regulated under the PSS Act by the Reserve Bank of India, it has been decided to exempt NBIs from the provisions of the Chapter lll B of the RBI Act, 1934, with respect to the money received by them for issue of PPIs.
2. Notification of date in this regard is enclosed .
Yours faithfully,
(N. S. Vishwanathan)
Principal Chief General Manager
RESERVE BANK OF INDIA
DEPARTMENT OF NON-BANKING SUPERVISION
CENTRAL OFFICE
CENTRE I, WORLD TRADE CENTRE
CUFFE PARADE, COLABA
MUMBAI 400 005
Notification No.DNBS. 273 /PCGM (NSV)-2014 dated January 24 , 2014
The Reserve Bank of India, on being satisfied that it is necessary so to do, in exercise of its powers conferred by section 45 NC of the Reserve Bank of India Act, 1934 (2 of 1934) hereby declares that the provisions of Chapter lll B of that Act shall not apply to a non-banking institution which is authorised to operate a payment system and to issue prepaid payment instruments under the Payment and Settlement Systems Act, 2007 (51 of 2007).
2. This exemption shall be limited and restricted to money received by such non-banking institution for issue of prepaid payment instruments.
(N. S. Vishwanathan)
Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/461 · issued FY 2013-14. The plain-English explanation above is BankPulse’s own independent summary.
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8709&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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