The Reserve Bank of India (RBI) in its Statement on Development and Regulatory Policies today has announced that it will allow cash withdrawals from non-bank entities provided the customer is fully KYC compliant. At present, cash withdrawal is allowed only for full-KYC compliant PPIs issued by banks.
PPIs stand for prepaid payment instruments. Forex cards, digital wallets etc are some examples of PPIs.
As per the governor’s statement: At present, cash withdrawal is allowed only for full-KYC PPIs issued by banks. As a confidence-boosting measure, and to bring uniformity across PPI issuers, it is now proposed to allow cash withdrawals for full-KYC PPIs of non-bank PPI issuers. This measure, in conjunction with the mandate for interoperability, will boost migration to full-KYC PPIs and would also complement the acceptance infrastructure in Tier III to VI centres.
The statement stated that the necessary instructions will be issued separately in this regard.
PPIs facilitate the purchase of goods and services against the value stored in the instrument. As per the RBI website, there are three types of PPI instruments: Closed system PPIs, Semi-closed system PPIs and Open System PPIs. Cash withdrawal is allowed only from the Open System PPIs.
Open System PPIs are: reloadable in nature, the amount outstanding shall not exceed Rs 1,00,000/- at any point of time and can be used for the purchase of goods and services, funds transfer and cash withdrawal.
The RBI has also increased the prepaid payment instrument limit to Rs 2 lakh from Rs 1 lakh currently.