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Introduction: In a recent development, the Reserve Bank of India (RBI) issued a crucial amendment to the Master Direction on Prepaid Payment Instruments (MD-PPIs). The directive, dated February 23, 2024, addresses all Prepaid Payment Instrument Issuers, including both banks and non-banks. The amendment focuses on enhancing digital payment convenience for commuters in public transport systems across the country.

Detailed Analysis: The amendment, referenced as RBI/2023-24/126 CO.DPSS.POLC.No.S1092/02-14-006/2023-2024, revises paragraph 10.2 of the MD-PPIs issued on August 27, 2021. The Master Direction outlines the types of Prepaid Payment Instruments (PPIs) that banks and non-banks can issue, subject to approval or authorization from the RBI.

The notable change introduced in this amendment is the permission granted to authorized bank and non-bank PPI issuers to issue PPIs specifically designed for making payments across various public transport systems. The decision is rooted in the aim to enhance the convenience, speed, affordability, and safety of digital payment modes for commuters utilizing transit services on a daily basis.

These directives are issued under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), and they come into effect immediately.

Conclusion: In conclusion, the RBI’s amendment to the Master Direction on Prepaid Payment Instruments signifies a progressive step towards promoting digital payments in the realm of public transport. By allowing authorized PPI issuers to facilitate payments for transit services, the RBI aims to elevate the overall experience for commuters, aligning with the broader digitalization initiatives. The directive, effective immediately, reflects the central bank’s commitment to adapting to evolving payment needs and fostering a more efficient and inclusive financial ecosystem. This development is poised to have a positive impact on the accessibility and adoption of digital payment solutions in the domain of public transportation.

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Reserve Bank of India

RBI/2023-24/126
CO.DPSS.POLC.No.S1092/02-14-006/2023-2024

February 23, 2024

All Prepaid Payment Instrument Issuers (Banks and Non-banks) and System Participants

Madam / Dear Sir,

Amendment to Master Direction on Prepaid Payment Instruments

This has reference to the Master Directions CO.DPSS.POLC.No.S-479/02.14.006/2021-22 dated August 27, 2021 on Prepaid Payment Instruments (MD-PPIs) (as amended from time to time), which prescribes, inter alia, the various types of PPIs which banks and non-banks can issue after obtaining necessary approval / authorisation from RBI.

2. Public transport systems across the country cater to a multitude of commuters on a daily basis. To provide convenience, speed, affordability, and safety of digital modes of payment to commuters for transit services, it has been decided to permit authorised bank and non-bank PPI issuers to issue PPIs for making payments across various public transport systems. The MD-PPIs has been updated by revising paragraph 10.2 thereof.

3. These instructions are issued under Section 18 read with Section 10 (2) of Payment and Settlement Systems Act, 2007 (Act 51 of 2007). These instructions shall come into effect immediately.

Yours faithfully,

(Gunveer Singh)
Chief General Manager-in-Charge

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