The notification was reportedly sent to non-bank PPI issuers, including fintech players. Any breach in this regard may give rise to criminal action under the provisions contained in the Payment and Settlement Systems Act 2007 RBI. The order will likely affect fintech players like Jupiter, Slice, LazyPay, Fi, among others.
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The Reserve Bank of India RBI has reportedly issued a notice to non-bank fintech players saying that prepaid payment instruments PPIs cannot be carry lines of credit.
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The PPI-MD PPI-master address does not allow loading PPIs from lines of credit. Such practice, if continued, must be stopped immediately. Any breach in this regard may lead to criminal proceedings under the provisions contained in the 2007 Payment and Settlement Systems Act, says the central bank’s notification addressed to non-bank PPI issuers.
The notification may affect fintech players such as Jupiter, Slice, LazyPay, Fi, among others.
The RBI also said that the PPI-MD only allows these instruments to be loaded reloaded in cash, debit to a bank account, credit and debit cards, PPI as permitted from time to time & other payment instruments issued by regulated. entities in India and will be in INR only.
The non bank PPI issuer space is populated by a wide range of companies offering a host of services. While companies like Jupiter allow customers to load their line of credit into a wallet, firms like slice and Fi offer credit through co-branded prepaid cards issued in partnership with banks.
The clarification comes at a time when complaints against digital loan players are seeing an uptick. Last week, RBI Governor Shaktikanta Das said that the central bank would soon introduce a broad regulatory architecture to tackle challenges related to digital lending.
Last month, the RBI also canceled the registration certificates of five NBFCs for violating the regulations.
India’s total addressable fintech opportunity is projected to reach $1.3 trillion by 2025. Of this, the buy now, pay later BNPL segment is expected to emerge as the biggest winner in the space, growing 11X to $43 billion by 2025, at a compound annual growth rate (CAGR) of 80% between 2021 and 2025.