What changed
RBI issued a fresh Master Direction on PPIs in August 2021, replacing the 2017 version, and has updated it multiple times through December 2024. The document consolidates all prior instructions into a single framework, emphasizing harmonization and interoperability of PPIs.
What it means for you
Banks and non-bank PPI issuers must align with the updated Master Directions, which reinforce RBI's oversight under the PSS Act. The focus on interoperability and customer protection will require system upgrades and compliance adjustments. Issuers must ensure their PPIs meet the new limits and operational conditions.
What you must do
- Review the full Master Directions document to identify all updated provisions and compliance deadlines.
- Ensure your PPI issuance and operations are authorized by RBI and adhere to the defined limits and conditions.
- Implement interoperability requirements as specified to allow PPIs to be used across different systems.
- Update customer protection measures, including disclosure, grievance redressal, and transaction security protocols.
Who it affects
All PPI issuers (banks and non-banks), System participants in payment systems, Merchants accepting PPIs, Holders of prepaid payment instruments
What is the effective date of these Master Directions?
The Directions came into effect from the date they were placed on the RBI website, i.e., August 27, 2021, with subsequent updates as per respective timelines.
Do closed system PPIs require RBI authorization?
No, closed system PPIs that are used only for purchasing goods/services from the issuing entity and do not allow cash withdrawal are not classified as a payment system requiring RBI approval.
What is the purpose of these Master Directions?
To provide a framework for authorization, regulation, and supervision of PPI issuers, foster competition and innovation, ensure safety and security, and promote harmonization and interoperability of PPIs.