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Home / NBFC & Fintech / Prepaid Instrument (PPI) License
The current PPI Master Directions still govern issuance today, but RBI’s April 2026 draft signals real change ahead — interoperability mandates, reclassified categories, and revised limits. CS Chetna Shoor structures your application against what’s binding now and what’s coming.
Prepaid Payment Instruments (PPIs) — digital wallets, prepaid cards, and similar instruments that let users load funds and spend them later — require RBI authorization for any non-bank issuer, under the Payment and Settlement Systems Act, 2007. The currently binding Master Directions, dated August 27, 2021 (as amended), require a minimum net worth of ₹5 crore at application, rising to ₹15 crore within three years and maintained permanently, along with an escrow account covering 100% of outstanding customer balances.
In April 2026, RBI released a Draft Master Direction on PPIs, 2026 for public comment, proposing a significant overhaul — reclassifying PPIs into General Purpose (Full-KYC and Small) and Special Purpose (Gift, Transit, Foreign National) categories, mandating UPI and card network interoperability for Full-KYC PPIs, and revising balance and transfer limits. As of this writing, the draft is not yet notified as binding, but it signals clearly where the framework is headed. This page is for founders building a wallet or prepaid card product who need the application structured against today’s binding rules while genuinely accounting for what’s coming. Chetna reviews your net worth position, technical architecture, and product design against both the current and proposed frameworks.
Net worth at application, rising within three years and maintained permanently — unchanged between current rules and RBI's 2026 draft
Customer funds held in a scheduled commercial bank escrow account, fully covering outstanding balances
The two core general-purpose categories, with different KYC and usage limits
Mandatory CERT-In empanelled audit within 6 months of in-principle approval (extendable by 6 months)
RBI's proposed overhaul, released April 2026 — not yet notified as binding
Legal basis for RBI's authorization requirement
RBI rejects over 40% of NBFC applications on the first attempt. Here’s what actually causes it.
RBI's draft 2026 Master Direction proposes real changes — PPI reclassification, mandatory interoperability, revised limits — that aren't yet binding but clearly signal where the rules are headed. Applying under the current framework without accounting for what's coming risks a product built around rules that shift within the license's early years.
RBI expects the escrow account to cover 100% of outstanding customer balances at all times, not just at periodic reconciliation checkpoints. Issuers that treat escrow funding as an occasional top-up rather than a continuous requirement risk a shortfall that an RBI audit will catch.
In-principle approval starts a strict clock for a CERT-In empanelled System Audit Report, extendable only once by six months. Issuers focused on launching the product can let this compliance deadline slip while building out the business.
PPI regulation splits by use case — building the right category into your application from the start avoids a mismatch RBI will flag.
For wallets or cards intended for broad use — purchases, transfers, and, subject to RBI's rules, cash withdrawals — requiring complete KYC verification.
Exempt from RBI authorization entirely if usable only for goods or services from the issuing entity itself, with no cash-out or third-party transfers permitted.
For simpler, minimal-KYC instruments limited to purchasing goods and services, with lower balance and usage limits.
For narrowly scoped use cases under RBI's proposed reclassification, each carrying its own specific conditions.
We confirm which PPI category fits your product design and assess your current net worth position.
A full review of your technical and governance documentation against what RBI expects for your category.
Escrow account coordination with a scheduled commercial bank, alongside business plan and policy preparation.
Full application filed through RBI's online portal.
Direct response to every RBI query, culminating in in-principle approval.
Coordination with a CERT-In empanelled auditor to complete the mandatory System Audit Report.
Final authorization is the starting point — the net worth, escrow, and reporting obligations continue for as long as you operate.
Ongoing net worth maintenance toward and beyond the ₹15 crore threshold.
Continuous escrow coverage of 100% of outstanding customer balances.
Annual system audits and periodic reporting — net-worth certificates, escrow balance certifications, and grievance reports.
Monitoring RBI's 2026 Master Direction process for when proposed changes are finalized and become binding.
CS Chetna Shoor’s team replies within 4 hours on WhatsApp.
A Prepaid Payment Instrument (PPI) license is RBI’s authorization for non-bank entities issuing wallets, prepaid cards, or similar instruments that let users load funds and spend them later. Banks already permitted to issue debit cards may issue PPIs after intimating RBI, while non-bank entities must obtain full authorization before commencing PPI business.
Non-bank PPI issuers need a minimum positive net worth of ₹5 crore at the time of application, rising to ₹15 crore by the end of the third financial year following authorization, and maintained on an ongoing basis thereafter. This requirement is consistent between the current 2021 Master Directions and RBI’s proposed 2026 draft.
RBI’s April 2026 draft proposes reclassifying PPIs into General Purpose (Full-KYC and Small) and Special Purpose (Gift, Transit, Foreign National) categories, mandating UPI and card network interoperability for Full-KYC PPIs, revising balance and transfer limits, and tightening several other operational rules. As of this writing, the draft has not been notified as binding, but it reflects RBI’s clear direction for the sector.
PPI issuers must maintain customer funds in an escrow account with a scheduled commercial bank, structured to cover 100% of outstanding customer balances at all times. This is a continuous requirement, not a periodic reconciliation exercise, and RBI’s audits specifically check this coverage.
Yes. A Closed System PPI — one that can only be used to purchase goods or services from the issuing entity itself, with no cash withdrawal, no third-party transfers, and no broader payment network participation — does not require RBI authorization. The moment an instrument allows third-party payments or cash-out, it falls outside this exemption.
Qualified Company Secretary · ICSI Member · Founder, Expertvuw Management Pvt Ltd
Chetna has guided NBFC promoters through RBI’s COR process end to end, with particular focus on structuring the Net Owned Fund and business plan so the application survives first-round RBI scrutiny rather than coming back with a query.