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On April 22, 2026, the Reserve Bank of India (RBI) released a draft Master Direction on Prepaid Payment Instruments (PPIs), 2026. The draft direction represents a comprehensive review of existing guidelines on PPIs and forms part of the RBI's broader efforts to develop a conducive regulatory framework for the long-term growth of PPIs while enhancing transaction security. The draft Master Direction aims to modernise the regulatory approach to prepaid payment instruments in India. By consolidating and updating existing guidance, the RBI seeks to provide clarity to regulated entities and market participants on compliance requirements, security standards, and operational procedures governing PPIs. The direction is intended to support the continued development of the prepaid payments sector while maintaining robust safeguards for consumers and the financial system. Regulated entities, members of the public, and other stakeholders are invited to submit comments and feedback on the draft direction through the RBI's "Connect 2 Regulate" section on its website. The comment period closes on May 22, 2026. Responses should be submitted via the hyperlink provided on the page where the draft direction is hosted. **Reference:** Reserve Bank of India Press Release 2026-2027/124 (April 22, 2026)

The Reserve Bank of India (RBI) is seeking feedback on its draft master direction on prepaid payment instruments (PPIs) which it states is aimed at enhancing the security and growth of the digital payments ecosystem. The draft directions prescribe: Authorisation and capital requirements including a mandate that non-bank entities be incorporated in India with a minimum starting net-worth of INR50m (US$531,000), which must increase to INR150m (US$1.59m) by the end of the third financial year of operations. Governance and "fit and proper" criteria including stringent integrity and reputation checks for promoters and directors, and a requirement for non-bank issuers to obtain prior RBI approval for any change in management or control. Customer due diligence (CDD) standards including a tiered approach for general purpose PPIs (full-KYC and small PPIs), where small PPIs are subject to a INR10,000 (US$106) monthly limit and a two-year maximum validity period before mandatory conversion to Full-KYC. Issuance and loading protocols including a ban on paper-based vouchers and interest payments on balances, while permitting loading via bank accounts, other PPIs, and cash (up to INR10,000 monthly for general purpose PPIs). Special purpose PPI classifications including specific regulatory frameworks for gift PPIs (max value INR10,000, non-reloadable), transit PPIs (max value INR3,000 (US$31) for public transport), and "UPI One World" wallets for foreign nationals visiting India. Interoperability and technical mandates including the requirement for full-KYC PPI issuers to facilitate interoperability through card networks or UPI, and the provision for PPI discovery on third-party UPI applications. Escrow account management including a mandate for non-bank issuers to maintain all client funds in a separate escrow account with a scheduled commercial bank, ensuring day-end balances never fall below the value of outstanding PPIs. Customer protection and grievance redressal including the implementation of a public dispute management framework, adherence to "turn around time" (TAT) for failed transactions, and access to the integrated ombudsman scheme. Reporting and audit obligations including monthly statistical submissions, quarterly auditor certificates on escrow balances, and annual submissions of audited net-worth and cyber security audit reports. Feedback may be submitted via the RBI's Connect2Regulate platform by May 22, 2026.

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India's Reserve Bank Releases Draft Master Direction on Prepaid Payment Instruments

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Reserve Bank of India Seeks Feedback on Draft Master Direction on Prepaid Payment Instruments