RBI on pre-paid cards

The Reserve Bank of India (RBI) today allowed holders of pre-paid payment cards to deposit school and college fees and pay taxes besides buy rail and air tickets within the prescribed limit of Rs 10,000.

The cards, alternatives to cash and cheques, are issued by banks and non-banking

financial companies on payment of a specified amount and are used for purchasing goods and services from limited outlets.

These cards are known as semi-closed pre-paid instruments. In view of the rising inflation, RBI has decided to increase the card’s minimum value from Rs 1,000 to Rs 2,000. However, the maximum limit for the semi-closed card with highest denomination has been retained at Rs 10,000.

These limits indicates the maximum amount that a card can hold at any given point of time.

RBI had earlier in 2009 came out with the guidelines for the pre-paid cards and allowed the holders to buy goods and services from different types of outlets. It had allowed holders to purchase travel tickets, insurance and pay water, electricity and telephone bills.