Pre-paid card issuers need Rs 1-crore paid-up capital

RBI asks entities to comply in three months.

The Reserve Bank of India (RBI) today issued new norms to regulate the fast-growing pre-paid cards industry and asked all the entities to comply with the guidelines within three months.

Only banks and non-banking financial companies (NBFCs), which meet the prescribed capital adequacy norms, can issue pre-paid payment instruments. RBI said these entities must have a minimum paid-up capital of Rs 1 crore and positive net-owned funds. Pre-paid payment cards are instruments that facilitate the purchase of goods and services against the value stored on such instruments. The value stored on such cards represents the value paid for by the holder.

They can be issued as smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets and paper vouchers. The maximum value of any pre-paid instrument will not exceed Rs 50,000.

The pre-paid cards will be valid for minimum six months from the date of activation or issuance to the holder.

The pre-paid payment instruments are in three categories — Closed system payment instruments; semi-Closed system payment instruments and open system payment instruments.

While banks can issue all categories of pre-paid cards, NBFCs are allowed to issue only semi-closed system payment instruments. Referring to the pre-paid mobile based cards, it said only banks, which have been permitted to provide mobile banking transactions, could launch such cards.

The entities operating the payment system will issue pre-paid payment instrument to individuals/organisations. They would retain the money and make payment to the concerned merchants. The payment could be made directly or through a settlement arrangement.

The customer can approach banking ombudsman for redressal of grievance. For schemes operated by banks, the outstanding balances will be part of the net demand and time liabilities for maintaining the reserve requirements.