RBI tightens norms for pre-paid cards; caps value at Rs 50K

The Reserve Bank today tightened and streamlined the norms regarding issuance of pre-paid payment instruments and capped their maximum value at Rs 50,000.
"The developments in the pre-paid payment instrument segment have necessitated a comprehensive review of guidelines issued so far," RBI said in a statement today, adding that the maximum balance of any such instrument should not exceed Rs 50,000.
It said the objective is to make all issuers comply with the strict money laundering laws and all the relevant KYC norms. No card can be issued without verifying the KYC of the issued party, it added.
The name of the issuer shall be visible prominently on the payment instrument. Banks/NBFCs/other persons desirous of issuing such co-branded prepaid instruments need to seek one-time approval from RBI, it said.

Last time the RBI issued these norms was in April, 2009 under Section 18 of the Payment and Settlement Systems Act of 2007. Today's norms will supersede all the existing norms under this segment of payments.
The RBI said the new norms will provide a framework for regulation and supervision of persons operating pre-paid payment systems and also ensure development of this segment in a prudent and customer-friendly manner.

The new norms also extend the definition of pre-paid card by including Internet wallets, mobile accounts, mobile wallets, paper vouchers and any such instrument which can be used to access the pre-paid amount.

On the capital requirements for non-bank, non-NBFC issuers, the RBI said they will have a minimum paid-up capital of Rs 500 lakh and minimum positive net worth of Rs 100 lakh at all the times.
It also capped the validity of any pre-paid gift instruments at one year and also barred issuers from reloading the card.