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Home / Industry / Banking /  Cash withdrawal from wallets; RTGS for non-banks: Key RBI Monetary Policy announcements

To encourage non-bank financial institutions such as mobile wallets and payments banks, Reserve Bank of India announced a host of changes in its monetary policy on Wednesday. From extending the National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) facilities to non-bank payment system operators to hiking the maximum end of day balance for payment banks, here are the key announcements from RBI Monetary Policy meet on 7 April

Payments bank deposit limit hiked to 2 lakh

The central bank on Wednesday increased the maximum end of day balance for payment banks to 2 lakh from 1 lakh.

"With a view to furthering financial inclusion and to expand the ability of payments banks to cater to the growing needs of their customers, the current limit on maximum end of day balance of 1 lakh per individual customer is being increased to 2 lakh with immediate effect," RBI governor Shaktikanta Das said.

Now non-bank payment operators can also use RTGS and NEFT

Money transfer facilities such as NEFT and RTGS have been extended to non-bank payment system operators. "It is now proposed to enable non-bank payment system operators like Prepaid Payment Instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms regulated by the Reserve Bank, to take direct membership in CPSs. This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments," RBI governor Shaktikanta Das said.

"These policy changes where NEFT and RTGS are extended beyond banks and doubling the limit for the payment banks is a real booster for the fintech sector. This will lead to faster financial inclusion with the agility and better user experience offered by the fintechs," said Mayank Goyal, founder and chief executive of moneyHOP.

"It certainly furthers the idea of branchless banking and aids the border economic agenda of the Indian government to build a paperless, presences and cashless economy," he added.

Full-KYC mandatory for PPIs

To promote optimal utilisation of payment instruments — cards and wallets — Reserve Bank of India announced mandatory interoperability for full-KYC PPIs and for all acceptance infrastructure.

"As the migration towards interoperability has not been significant, it is now proposed to make interoperability mandatory for full-KYC PPIs and for all payment acceptance infrastructure," RBI chief said.

"To promote optimal utilisation of payment instruments (like cards, wallets etc.), and given the constraint of scarce acceptance infrastructure (like PoS devices, ATMs, QR codes, bill-payment touch points, etc.), Reserve Bank of India has been stressing on the benefits of interoperability amongst the issuing and acquiring entities alike, banks or non-banks," the central bank mentioned.

Mobile wallet limits doubled

"To incentivise the migration of PPIs to full-KYC, it is proposed to increase the limit of outstanding balance in such PPIs from the current level of 1 lakh to 2 lakh. Necessary instructions will be issued separately," the bank said in a statement.

Cash withdrawal from full-KYC PPIs issued by non-banks

At present, cash withdrawal is allowed only for full-KYC Prepaid Payment Instruments (PPIs) issued by banks. This facility is available through ATMs and PoS terminals. "Holders of such PPI, given the comfort that they can withdraw cash as required, are less incentivised to carry cash and consequently more likely to perform digital transactions," the central bank said.

To bring uniformity among users, the banking regulator proposed to permit cash withdrawals for full-KYC PPIs of non-bank PPI issuers. Now, users of PPIs like wallet and prepaid cards issued by non-banks would be able to withdraw cash.

"As a confidence-boosting measure, and to bring uniformity across PPI issuers, it is now proposed to allow cash withdrawals for full-KYC PPIs of non-bank PPI issuers. This measure, in conjunction with the mandate for interoperability, will boost migration to full-KYC PPIs and would also complement the acceptance infrastructure in Tier III to VI centres," Das mentioned.

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