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.
What you must do
- 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
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.