India’s apex bank is revising the framework for Prepaid Payment Instruments (PPIs) to improve security, ease refunds, boost customer protection, and enhance India’s payments ecosystem.
The Reserve Bank of India (RBI) is working on a revised framework for Prepaid Payment Instruments (PPIs), the system behind digital wallets, prepaid cards, and similar payment tools.
On Wednesday, the central bank proposed a set of measures to support long-term growth of PPIs, including steps to strengthen transaction security, along with clearer rules on refunds and grievance redressal. As per RBI’s propositions, the objective is to build “a conducive framework for long-term growth of PPIs with enhanced security of transactions,” while also strengthening transaction security, consumer protection, and system efficiency.
Accordingly, a draft Master Direction on Prepaid Payment Instruments was issued by the RBI, and comments were invited by May 22, 2026.
RBI mentions that the existing framework is being reviewed as part of its ongoing effort to strengthen digital payments. The draft mentions a “comprehensive review of the extant guidelines” to ensure better security and long-term stability of the ecosystem.
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What is a PPI?
PPI is a digital payment instrument where money is loaded into the wallet or card in advance and then used for facilitating subsequent transactions or transferring funds.
RBI defines it as a payment instrument “in which money is loaded and which facilitates subsequent transactions utilising this money.” These include categories such as general purpose PPI, gift PPI, transit PPI, and PPIs for non-resident Indians (NRIs), covering commonly used facilities such as mobile wallets and other prepaid tools. Simply put, stuff like your mobile wallets and gift cards fall under this category.
Who can issue PPIs?
The authorisation for PPI business is segregated for banks and non-banks. The draft said banks permitted by RBI to issue debit cards can also issue PPIs. This requires prior intimation to the Department of Payment and Settlement Systems (DPSS), at its central office in Mumbai. For non-bank entities, authorisation from the RBI is mandatory for issuance of PPIs.
“A non-bank applicant shall have a minimum net-worth of ₹5 crore, and shall submit a certificate…from its statutory auditor,” the draft said.
Further, a non-bank PPI issuer should attain a minimum net-worth of ₹15 crore by the end of the third financial year of authorisation. The aim is to ensure only financially stable companies operate in this space.
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RBI proposes a cap on wallet balances
The draft proposes category-wise limits to ensure that users use it in an efficient and controlled manner.
For general purpose PPI, the RBI proposed that the amount outstanding in such cases should not exceed ₹2 lakh at any point of time. Cash loading in the same may be restricted to ₹10,000 per month. In case of Gift PPIs, the draft caps the maximum value at ₹10,000 while in case of transit PPI, it may be capped at ₹3,000.
When it comes to NRIs, a PPI wallet may be issued only after physical verification of Passport and Visa, which will aid their person to merchant (P2M) payments during their stay in India. “Loading of such PPI shall be against receipt of foreign exchange by cash or through any payment instrument. Total amount debited from such PPI during any month shall not exceed ₹5 lakh,” the RBI’s draft read.
Customer protection at the centre
The RBI has placed a lot of focus on transparency and grievance handling. The draft says issuers must disclose “all features of PPI, and all associated charges, validity period and terms and conditions in clear and simple language.” It also requires a formal grievance system with clear escalation and timelines for resolution.
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What happens in case of failed transactions?
According to the draft, refunds for transactions that are unsuccessful, returned, rejected, or cancelled should be applied to the appropriate PPI right away, even if such refunds result in exceeding the prescribed limits for that specific PPI category. However, the draft states that PPI would not be credited with refunds for transactions made using any other payment method.
Additionally, it suggests that PPI issuers provide users with clear information about all features, related fees, validity periods, and terms and conditions at the time of issuance in plain language, ideally in Hindi, English, and the local language. RBI has emphasised transparency and grievance handling through this measure.
RBI bars agents from charging extra fees
The proposal further stated that PPI issuer agents are not permitted to impose any kind of charges on the customers. Additionally, the draft suggested ways to reduce customers’ liability in the event of an unauthorised PPI transaction.
Also, the proposal mentioned that a non-bank PPI issuer must keep the money received in exchange for issuing PPIs in a different escrow account that is kept in Indian rupees with an Indian commercial bank.
