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RBI allows PPIs for public transit payments

Current · Source: Reserve Bank of India · RBI/2023-24/126 · issued 23 Feb 2024 · ~1 min read
Quick answerRBI now permits authorised banks and non-banks to issue Prepaid Payment Instruments (PPIs) for payments across public transport systems, aiming to boost digital payment adoption among commuters.
The rule, in the simplest words
How it plays out — a real example

A branch operations officer in Indore, Priya, sees that her bank can now issue a transit wallet. She works with the local bus corporation to let commuters load money onto the wallet at her branch, so they can tap and ride without cash. Priya makes sure every new wallet user shows their ID (KYC) and that the wallet works at any bus terminal, not just one route.

What changed

RBI amended the Master Direction on PPIs (MD-PPIs) to allow authorised PPI issuers to issue instruments specifically for payments across various public transport systems. This expands the use case of PPIs beyond existing categories.

What it means for you

Banks and non-bank PPI issuers can now tap into the high-volume transit segment, offering commuters a faster, safer digital payment option. This could drive PPI issuance volumes and transaction revenues, but issuers must ensure compliance with existing KYC and interoperability norms.

What you must do

Who it affects

Banks issuing PPIs, Non-bank PPI issuers, Public transport operators, Commuters using transit services

❓ Common questions

Can we issue PPIs for all public transport systems now?

Yes, RBI has permitted authorised bank and non-bank PPI issuers to issue PPIs for payments across various public transport systems, effective immediately.

Do we need separate RBI approval for transit PPIs?

The circular does not specify a separate approval process; existing PPI authorisation should suffice, but issuers must comply with all MD-PPI provisions.

📜 Read the original circular — full text as issued by RBI
RBI/2023-24/126 CO.DPSS.POLC.No.S1092/02-14-006/2023-2024 February 23, 2024 All Prepaid Payment Instrument Issuers (Banks and Non-banks) and System Participants Madam / Dear Sir, Amendment to Master Direction on Prepaid Payment Instruments This has reference to the Master Directions CO.DPSS.POLC.No.S-479/02.14.006/2021-22 dated August 27, 2021 on Prepaid Payment Instruments (MD-PPIs) (as amended from time to time), which prescribes, inter alia , the various types of PPIs which banks and non-banks can issue after obtaining necessary approval / authorisation from RBI. 2. Public transport systems across the country cater to a multitude of commuters on a daily basis. To provide convenience, speed, affordability, and safety of digital modes of payment to commuters for transit services, it has been decided to permit authorised bank and non-bank PPI issuers to issue PPIs for making payments across various public transport systems. The MD-PPIs has been updated by revising paragraph 10.2 thereof. 3. These instructions are issued under Section 18 read with Section 10 (2) of Payment and Settlement Systems Act, 2007 (Act 51 of 2007). These instructions shall come into effect immediately. Yours faithfully, (Gunveer Singh) Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2023-24/126 · issued 23 Feb 2024. The plain-English explanation above is BankPulse’s own independent summary.
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Topics: Digital Payments / UPI
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Banks issuing PPIs, Non-bank PPI issuers, Public transport operators, Commuters using transit services), your first concrete step on “RBI allows PPIs for public transit payments” is: “Review and update your PPI product suite to include transit-specific instruments.” (RBI issued this 23 Feb 2024).

  1. Circular: RBI/2023-24/126 -- RBI allows PPIs for public transit payments
  2. Issued: 23 Feb 2024
  3. Action required: Review and update your PPI product suite to include transit-specific instruments.
  4. Action required: Ensure compliance with all existing MD-PPI requirements, including KYC and interoperability.
  5. Action required: Coordinate with public transport operators to integrate PPI acceptance.
  6. Action required: Monitor RBI circulars for any further operational guidelines on transit PPIs.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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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=12612&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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