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ARTICLE · 28 JUNE 2022

Prepaid Instruments – Akin To Credit Facility?

ALAYA LEGAL ADVOCATES
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A mention of prepaid payment instruments (‘PPIs') invariably reminds us of an e-wallet. This is because a PPI is typically understood to mean an instrument which allows its holder to store value...

IndiaTechnology
Suniti Kaur
Suniti Kaur
Kunal Lohani
Kunal Lohani
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Abstract- A mention of prepaid payment instruments (‘PPIs') invariably reminds us of an e-wallet. This is because a PPI is typically understood to mean an instrument which allows its holder to store value (read, cash) and utilise such value which is ‘stored' at a later date. The PPI is not intended to enable credit facility. FinTechs may have made this possible. Let us take a closer look.

Legal framework

The Reserve Bank of India (‘RBI') has further to Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 issued The Master Directions on Prepaid Payment Instruments (‘MD-PPIs' or ‘MD') dated August 27, 2021, govern the issuance of PPIs in India. The relevant provisions of the MD-PPIs are as follows:

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