The Reserve Bank of India (RBI) has put out an approach paper for regulating issuance of pre-paid payment instruments, such as smart cards, mobile purse and paper vouchers, by banks and other entities.
With such instruments gaining popularity, the central bank has come out with guidelines, the comments on which have been invited by November 30.
All banks and non-banking finance companies (NBFCs) meeting the regulatory capital adequacy norms will be allowed to issue the instruments, which can be used for purchase of goods and services, after obtaining permission from RBI, the proposed guidelines said.
However, entities issuing payment instruments used by business establishments for use at that establishment only or for using services from a service provider will not be included under the purview of the guidelines, RBI said.
For avoiding the misuse of instruments like those used for purchase of goods, etc (open system payment instrument) and semi-open system payment instruments, know-your-customers (KYC) norm and anti-money laundering rules will be applicable to them.
Moreover, instruments redeemable at a group of establishments associated with a particular shopping mall and tourist resorts can be issued for up to Rs 500 without any KYC, RBI said.
“These cards, which include gift cards and travel cards, would be subjected to higher safeguards,” RBI said.
