New Delhi | In a significant move aimed at strengthening India’s rapidly growing digital payments ecosystem, the Reserve Bank of India (RBI) has proposed a revised regulatory framework for Prepaid Payment Instruments (PPIs), which include mobile wallets and prepaid cards. The draft guidelines focus on enhancing transaction security, improving customer protection, and ensuring long-term stability of the sector.
The central bank has released a draft Master Direction outlining a wide range of measures and has invited public feedback until May 22, 2026. The move comes at a time when digital transactions are witnessing exponential growth, alongside a parallel rise in cyber fraud and customer grievances.
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PPIs are instruments that allow users to load money in advance and use it for various transactions, including payments to merchants, peer transfers, and services. These include general-purpose wallets, gift cards, transit cards, and even specialized wallets for non-resident Indians (NRIs) and foreign nationals.
One of the key highlights of the proposal is the introduction of strict limits on wallet balances. As per the draft, the outstanding balance in a general-purpose PPI should not exceed ₹2 lakh at any point. Additionally, cash loading into such wallets may be capped at ₹10,000 per month, a move aimed at reducing misuse and ensuring traceability of funds.
For other categories, the RBI has suggested tighter caps. Gift PPIs may be limited to a maximum value of ₹10,000, while transit PPIs—commonly used for travel payments—could be capped at ₹3,000. These limits are designed to align usage with purpose while minimizing systemic risks.
The draft also opens the door for foreign nationals and NRIs to access PPIs during their stay in India. However, strict verification norms will apply, including mandatory physical verification of passport and visa. Transactions through such wallets will also be capped, with a monthly debit limit of ₹5 lakh, ensuring controlled and compliant usage.
Another major reform proposed is related to refunds. The RBI has emphasized that in cases of failed, reversed, or cancelled transactions, the refund amount must be credited back to the user’s wallet immediately. Notably, this applies even if the refund causes the wallet balance to temporarily exceed prescribed limits. This measure is expected to significantly improve customer experience and reduce disputes.
Transparency and disclosure norms have also been strengthened. PPI issuers will be required to clearly communicate all features, charges, validity periods, and terms and conditions at the time of issuance. Importantly, this information must be presented in simple language and, wherever possible, in English, Hindi, and the local language to ensure wider accessibility.
In a move aimed at protecting consumers from hidden costs, the RBI has proposed that agents of PPI issuers will not be allowed to charge any additional fees from customers. This is expected to curb unauthorized charges and bring greater accountability within the ecosystem.
The draft also addresses customer liability in cases of unauthorized transactions. By defining clear rules on liability limits, the RBI aims to build greater trust among users and encourage wider adoption of digital payment tools.
For non-bank entities looking to issue PPIs, the central bank has laid down stricter financial requirements. Applicants must have a minimum net worth of ₹5 crore at the time of application and must achieve ₹15 crore within three years of authorization. Additionally, funds collected from customers must be maintained in a separate escrow account with a commercial bank in India, ensuring better safeguarding of user money.
Overall, the proposed framework reflects RBI’s intent to strike a balance between innovation and regulation. By tightening norms around security, transparency, and accountability, the central bank is seeking to create a safer and more resilient digital payments environment.
As digital wallets continue to play a crucial role in India’s financial landscape, these proposed changes could redefine how users interact with prepaid instruments, making transactions not only more secure but also more reliable and user-friendly in the long run.
