RBI tightens capital norms for non-bank PPI issuers; clamps down on small wallets

In the new draft master direction on PPIs released on Wednesday, the central bank said that non-bank applicants must have a minimum net worth of Rs 5 crore at the time of seeking authorisation and scale it up to Rs 15 crore by the end of the third financial year, after which the minimum net worth must be maintained on an ongoing basis.

The draft also tightens the regulatory perimeter around Small PPIs — wallets issued with minimum customer due diligence. While the existing caps of Rs 10,000 outstanding balance and Rs 10,000 monthly debit remain, the RBI has clarified that only one small PPI can be issued to a customer at any point in time, and no fresh small PPI can be issued after expiry of the earlier one.

Small PPIs will continue to be restricted to purchase of goods and services, with no provision for cash withdrawal or person-to-person transfers. They will have a maximum validity of two years but may be converted into a full-KYC PPI during their validity period. For full-KYC PPIs For full-KYC PPIs, the draft retains the Rs 2 lakh cap on outstanding balance and monthly debits.

Person-to-person transfers from such wallets will be limited to Rs 25,000 per month, while cash loading will be capped at Rs 10,000 per month. Only one full-KYC PPI can be issued to a holder at any point in time. Full-KYC PPI should have a minimum validity of one year from the date of issuance, the RBI said .

Commenting on the draft, Dilip Modi, Founder and CEO of Spice Money, said the guidelines are a “timely step to strengthen trust and discipline in the digital payments ecosystem.” He said clearer guardrails around security, grievance redressal and issuer norms were critical for sustainable growth as the market evolves.

While UPI dominates retail payments, PPIs continue to serve distinct, high-utility use cases, particularly in assisted models that bridge access and trust gaps, he added, describing the framework as striking a balance between innovation and consumer protection. Customer due diligence norms Customer due diligence norms have been aligned with the latest KYC directions, and interoperability through card networks and UPI has been reiterated for full-KYC PPIs.

The RBI has also introduced clearer norms around inactivity and closure, requiring issuers to transfer outstanding balances back to the source account or a verified bank account upon expiry or closure. The RBI also requires non-bank PPI issuer to maintain the funds collected against issuance of PPIs in a separate escrow account with a Scheduled Commercial Bank (SCB).

Such an escrow account shall be utilised only for authorised PPI business and not for any other business.