Not Buying It On ‘Buy Now Pay Later'

Reserve Bank of India's (RBI's) recent directive prohibiting prepaid payment instrument (PPI) operators from loading PPIs with credit lines has caused a major upheaval in the digital lending industry, leading to widespread confusion amongst industry participants regarding its scope and applicability, and exclusions. PPIs are prepaid instruments such as digital wallets, cards, accounts, etc, which are loaded with money for purchasing and selling goods and services and for facilitating fund transfers. Banks and non-bank entities meeting eligibility criteria prescribed by RBI can provide PPI services after receiving approval or authorisation.

The past few years have witnessed the burgeoning of such digital wallets and prepaid card operators. Many of these PPI operators also provide 'buy now pay later' services (BNPL), which are essentially credit lines or pre-set borrowing limits that allow customers to access credit as and when required up to the prescribed limit.