The Reserve Bank of India (RBI) has released a draft Master Direction on Prepaid Payment Instruments (PPIs), aimed at tightening the regulatory framework for digital wallets and prepaid cards. These proposed rules are designed to enhance customer protection, increase operational transparency, and ensure the financial stability of non-bank issuers. The central bank has invited public feedback on these proposals, with a deadline set for May 22, 2026, marking a significant step toward a more secure digital payment ecosystem in India.
One of the primary focuses of the draft is the financial eligibility and fund management of non-bank PPI issuers. The RBI has proposed that new applicants must have a minimum net worth of Rs 5 crore, which must scale up to Rs 15 crore by the end of their third financial year. To safeguard user money, the draft mandates that all funds collected against PPIs be held in a dedicated rupee escrow account with a commercial bank. Additionally, general-purpose PPIs will have an outstanding limit of Rs 2 lakh, with cash-loading restricted to Rs 10,000 per month to prevent misuse.
The draft also emphasizes transparency and ease of use for the general public. PPI issuers will be required to clearly disclose all terms, charges, and validity periods in simple language, including English, Hindi, and regional languages. Notably, the RBI has addressed common pain points regarding transaction failures; the new rules mandate that refunds for cancelled or failed transactions must be credited back to the wallet immediately, even if it causes the account to temporarily exceed its balance limit. These measures collectively aim to build greater trust in digital transactions as the country continues its push toward a cashless economy.
