RBI introduces pre-paid instrument to ease commuter woes

The Reserve Bank today introduced a new type of pre-paid instrument of up to Rs 2,000 for Mass Transit Systems to facilitate migration from cash-based payments to electronic ones.
"The Pre-paid Payment Instruments for Mass Transit System (PPI-MTS) will enhance commuter convenience and also facilitate migration to electronic payments in line with the country's vision of moving to a cashless society," RBI said while issuing final guidelines in this regard.
The instrument, which will be issued by mass transit operators, will have a minimum validity of six months from the date of issue. The PPIs will be reloadable instruments, subject to an outstanding limit of Rs 2,000 at any point of time.

Apart from the mass transit system, the instrument can be used at other merchants whose activities are allied to or are carried on within the premises of the transit system, RBI said.
RBI said the migration of micro- and small-value cash payments can play a significant role in achieving the vision of a cashless society.
"One such area where a large number of small-value cash payments take place relates to mass transit systems," it said.

The semi-closed PPIs, it said, will be issued by the mass transit system operator (PPI-MTS) after authorisation under the Payment and Settlement Systems Act.
"The PPI-MTS will necessarily contain the Automated Fare Collection application related to the transit service to qualify as PPI-MTS," read the guidelines.

However, no cash-out or refund will be permitted from these PPIs, the central bank added. Furthermore, the issuer may decide on the desired level of KYC, if any, for such PPIs.