Digital wallet just got more loaded - Credit balance doubled to Rs 20000 a month

TT, Mumbai, Nov. 22: Users of mobile and Internet wallets and other pre-paid payment instruments have been permitted to reload a credit balance of up to Rs 20,000 a month - twice the existing limit - as the government strives to encourage digital payments. 

Pre-paid payment instruments (PPIs) facilitate purchase of goods and services, including funds transfer, against the value stored on such instruments in the form of reloads using cash, debit from a bank account, or by credit card. The pre-paid instruments can be issued as smart cards, magnetic stripe cards, Internet accounts, Internet wallets, or mobile wallets.

The RBI said in a notification today: "The limit of semi-closed PPIs issued with minimum details has been enhanced to Rs 20,000 from the existing Rs 10,000. The total value of reloads during any given month has also been enhanced to Rs 20,000."

Semi-closed PPIs, which include mobile wallets like PayTM and Ola Money, do not permit cash withdrawal or redemptions by the holder.

These instruments can be used for purchase of goods and services, including financial services at clearly identified merchant locations or establishments that have a specific contract with the issuer to accept the payment instruments.

There are three categories of PPIs: the first that permits customers to use instruments issued only in electronic form like mobile wallets with a reload limit of Rs 20,000 a month. These require minimum consumer identification details and an email ID and a mobile phone number usually suffice.

Today's relaxation in reload limits is confined to this category.

The second category of PPIs permits reloads between Rs 10,001 and Rs 50,000 and consumers need to furnish any officially valid document. The third category requires full know your customer (KYC) details and permits reload amounts of up to Rs 1 lakh. Neither of these two categories are covered by today's notification.

A special dispensation has now been enabled for small merchants whereby the issuers can issue PPIs to such merchants, the central bank said.

The only condition is that such merchants will have to give a self-declaration on their merchant status and details of their own bank accounts, which the issuer must keep on record.

The PPIs can be issued to such willing merchants only after due verification and validation of their bank account details. Inflows of funds or credit to such PPIs shall emanate only from sale transactions of the merchants.

The measures will be effective from November 21 till December 30, subject to review.

Wedding rule tweak

The government has modified the guidelines for the withdrawal of Rs 2.5 lakh for weddings issued yesterday. Vendors receiving payments in cash from families planning weddings will have to submit a self-declaration that they do not have bank accounts only if they receive payments above Rs 10,000.

"A detailed list of persons to whom the cash withdrawn is proposed to be paid, together with a declaration from such persons that they do not have a bank account, where the amount proposed to be paid is Rs 10,000 or more. The list should indicate the purpose for which the proposed payments are being made," the RBI said in the latest notification.

Monday's notification was seen as too onerous. However, the latest relaxation is unlikely to make things very easy for those planning weddings before December 30.

The RBI asked banks to ensure that adequate funds were provided to rural cooperative banks for disbursal to farmers so that they had enough valid notes to purchase seeds, fertilisers and other inputs during the ongoing rabi season.

"It is estimated that about Rs 35,000 crore would be required by district co-operative banks for sanction and disbursement of crop loans to farmers at the rate of Rs 10,000 crore per week," the RBI said in a notification.

The National Bank for Agriculture and Rural Development (Nabard) will use its own cash credit limits up to about Rs 23,000 crore to enable the district cooperative central banks to disburse the required crop loans to primary agricultural credit society and farmers, it said.