{"id":5736,"date":"2019-07-29T18:49:22","date_gmt":"2019-07-29T13:19:22","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=5736"},"modified":"2021-04-06T17:28:08","modified_gmt":"2021-04-06T11:58:08","slug":"rbi-norms-for-semi-closed-wallet","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/","title":{"rendered":"What are the RBI Norms for Semi Closed Wallet?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In India, Semi closed wallets like PayTM, Mobikwik; Phone Pay, etc. have gained massive importance in the lives of people. Nowadays, people prefer e-wallets or online modes for their transactions and try to avoid cash transactions. Many entities want to operate as the Semi closed payment instrument issuers in India to provide facilities to their customers for purchasing goods and services, fund transfer, etc. To know more about PPI&#8217;s and government norms related to semi closed wallet, let\u2019s proceed further;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3ad33dbb1dc\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3ad33dbb1dc\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#What_is_Semi_Closed_wallet\" title=\"What is Semi Closed wallet?\">What is Semi Closed wallet?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#What_are_the_norms_of_RBI_for_the_Semi_Closed_Wallet\" title=\"What are the norms of RBI for the Semi Closed Wallet?\">What are the norms of RBI for the Semi Closed Wallet?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#Eligibility_Criteria_for_obtaining_Semi_Closed_Wallet_license\" title=\"Eligibility Criteria for obtaining Semi Closed Wallet license\">Eligibility Criteria for obtaining Semi Closed Wallet license<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#Requirements_to_be_fulfilled_for_obtaining_Semi_Closed_Wallet_license\" title=\"Requirements to be fulfilled for obtaining Semi Closed Wallet license\">Requirements to be fulfilled for obtaining Semi Closed Wallet license<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#Safeguards_by_RBI_for_Semi_closed_wallet\" title=\"Safeguards by RBI for Semi closed wallet \">Safeguards by RBI for Semi closed wallet <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#Banks_and_Non-banks_PPI_issuers\" title=\"Banks and Non-banks PPI issuers\">Banks and Non-banks PPI issuers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#Validity_of_PPI\" title=\"Validity of PPI\">Validity of PPI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#The_mechanism_for_Redressing_Customer_Grievances\" title=\"The mechanism for Redressing Customer Grievances \">The mechanism for Redressing Customer Grievances <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/rbi-norms-for-semi-closed-wallet\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Semi_Closed_wallet\"><\/span>What is Semi Closed wallet?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A semi-closed wallet is a wallet used for purchasing goods\nand services and other remittance facilities for clearly identified merchant\nlocation or establishment. The users of semi-closed wallet can also transfer\ntheir virtual fund to other users as well.<\/p>\n\n\n\n<p>Thus, the level of security in these wallets is very high and can allow uninterrupted and fast transactions to the merchants as well as to the bank accounts. The user needs to link the <strong><a href=\"https:\/\/swaritadvisors.com\/learning\/rbi-prompts-the-emergence-of-video-kyc\/\" class=\"text-primary\">KYC details<\/a><\/strong> with the e-wallet to make transactions more than Rs.10k. The semi-closed wallet holders are not allowed to withdraw their cash or the balance of their Semi closed wallet. The users can only use that cash for any purchase or fund transfer to another user or the bank account. <\/p>\n\n\n\n<p><strong><em>In India, PayTM, Mobikwik, PayU, etc. are semi-closed wallets.<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_norms_of_RBI_for_the_Semi_Closed_Wallet\"><\/span>What are the norms of RBI for the Semi Closed Wallet?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To regulate semi closed wallets in India, Reserve Bank of\nIndia has provided specific directions and regulations for the issuance and\nfunctioning of Prepaid Payment Instruments. <\/p>\n\n\n\n<p>PPIs (Prepaid Payment Instruments) are the instruments that help in facilitating the purchase of goods and services, financial services, etc. against the value\/amount stored in such an instrument. In India, the PPIs are classified into three different categories:<\/p>\n\n\n\n<ul><li>Open System PPIs<\/li><li>Closed System PPIs<\/li><li>Semi-Closed System PPIs<\/li><\/ul>\n\n\n\n<p><strong>Semi Closed wallets are considered under the third category of PPI i.e., Semi Closed System PPI. <\/strong><\/p>\n\n\n\n<p>Therefore, for the operations of Semi closed wallets in India, the entity must obtain the license from RBI under the Payment and Settlement Systems Act, 2007.<\/p>\n\n\n\n<p>The various norms for the issuance of a license for the\noperations of Semi Closed wallets by Reserve Bank of India are as follows:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_Criteria_for_obtaining_Semi_Closed_Wallet_license\"><\/span>Eligibility Criteria for obtaining Semi Closed Wallet license<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li>Banks must fulfil the eligibility criteria as stipulated by the Regulatory department of Reserve Bank of India.<\/li><li>&nbsp;NBFCs authorized by RBI.<\/li><li>Banks permitted for conducting mobile banking transactions by Reserve Bank of India.<\/li><li>Non-banks that fulfil the adequate capital requirement can obtain this license only after the authorization or approval from RBI.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Requirements_to_be_fulfilled_for_obtaining_Semi_Closed_Wallet_license\"><\/span>Requirements to be fulfilled for obtaining Semi Closed Wallet license<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol><li>RBI shall notify the minimum capital requirement for banks and NBFCs (authorized by RBI) on time to time basis. <\/li><li>All the non-banking entities who want to seek approval from RBI for operating as Semi closed instrument issuers should have a <strong>minimum net worth of Rs.500 lacs or 5 crs<\/strong> as per last Balance Sheet. <\/li><li>In case the entity is newly incorporated or not even completed one year of its incorporation, then the <strong>Certificate from CA of the company duly signed and sealed<\/strong> along with provisional Balance Sheet should be submitted to represent the current net worth of the company.<\/li><li>Non-banking entities incorporated in India or listed under Companies Act, 1956 or 2013.<\/li><li>The Memorandum of Association of any non-banking entity must specify its operating activity as <strong><a href=\"https:\/\/swaritadvisors.com\/learning\/prepaid-payment-instruments\/\" class=\"text-primary\">Prepaid Payments Instruments<\/a><\/strong> issuer.<\/li><li>Indian incorporated companies which satisfy the capital requirements prescribed under policy guidelines of FDI can also apply for this license.<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Safeguards_by_RBI_for_Semi_closed_wallet\"><\/span>Safeguards by RBI for Semi closed wallet <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li>RBI has introduced various safeguards such as KYC, AML, or CFT for reducing any risk associated with non-money and; and introduced necessary provisions to support the guidelines of the compliance.<\/li><li>The PPI\u2019s maximum value shall not exceed Rs. 50000.<\/li><li>Only one card issued to the same person, and there is no requirement of KYC if Semi Closed Payment Instrument issued up to Rs.1000.<\/li><li>Semi Closed Prepaid Payment instrument can be issued after KYC verification if the value exceeds Rs.5000.<\/li><li>&nbsp;Those Semi Closed Payment Instruments which only permit the transaction for the electricity bill, utility bill, water bill or other such services up to Rs.10000.<\/li><li>&nbsp;These instrument issuers do not need <strong>KYC<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Know_your_customer\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup>, but they have to ensure that these facilities are acceptable at those institutions that maintain the record of users for further inspection by RBI. <\/li><li>All the PPI issuers shall maintain the infrastructure of data security for the detection and prevention of fraud.<\/li><li>Entities that are issuing PPIs facilities can also file STR (Suspicious Transaction Report) to FIU (Financial Intelligence Unit)-India if in case any suspicious transaction found. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Banks_and_Non-banks_PPI_issuers\"><\/span>Banks and Non-banks PPI issuers<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong><em>PPI&nbsp; issued by both banks as well by non-banking entities.<\/em><\/strong><\/p>\n\n\n\n<p>Prepaid payment instruments in case of<strong> Semi closed wallet up to Rs.10k<\/strong> can be issued by accepting these\nfollowing details only:<\/p>\n\n\n\n<ul><li>Mobile Number verification by generating OTP\n(One Time Password),<\/li><li>Self-declaration of UIN (Unique Identification\nNumber) and name by any official document defined under Rule D of PML Rules,\n2005.<\/li><li>The amount of PPI cannot exceed Rs.10k in a\nmonth and Rs. 1lakh in the whole financial year.<\/li><li>In this case, the PPIs are used for purchasing\ngoods and services, not for any bank transfer or PPI transfer to the same\ninsurer.<\/li><li>If the PPI holder wants to close the PPI\naccount, then the outstanding balance can be transferred to the bank account of\nthe holder only after KYC verification.<\/li><\/ul>\n\n\n\n<p>Prepaid payment instruments in case of<strong> Semi closed wallet up to Rs.100k<\/strong> can be issued after KYC verification of the PPI holder. The holder will have to keep this in mind that the outstanding amount shall not exceed Rs. 100 lacs at any point of time.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Validity_of_PPI\"><\/span>Validity of PPI<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li>In the case of Semi closed wallet, the validity\nof PPI is six months from the date of issuance to its holder.<\/li><li>The holder of the PPI can redeem their\noutstanding amount to their respective banks within the date of expiry or\ndiscontinuance by order of RBI. But the holder cannot exceed the PPI\u2019s\nredemption value than its face value.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_mechanism_for_Redressing_Customer_Grievances\"><\/span>The mechanism for Redressing Customer Grievances <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>All the entities issuing PPI to users must define all the\nterms, conditions, and usage in clear terms at the time of issuance.<\/p>\n\n\n\n<p>The entities should build an effective mechanism to handle\nthe complaints of the customers.<\/p>\n\n\n\n<p><strong>The entities should avail the following facilities to its customers:<\/strong><\/p>\n\n\n\n<ul><li>Customer helpline or toll-free number.<\/li><li>Validity<\/li><li>Terms and conditions brochure<\/li><li>The URL of the website<\/li><li>Charges information<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In this article, we\u2019ve discussed various norms of semi closed wallets or PPI\u2019s in India. The Government of India provides all security for conducting transactions through Semi closed wallets. It has also introduced several compliance to be fulfilled for reducing corrupting and detecting fraud transactions.<\/p>\n\n\n\n<p>Every individual should prefer digital transactions rather than cash transactions for detecting fraud in transactions because they have proof of every purchase. <\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/semi-closed-wallet-license\">What is the Semi-Closed Wallet License in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In India, Semi closed wallets like PayTM, Mobikwik; Phone Pay, etc. have gained massive importance in the lives of people. Nowadays, people prefer e-wallets or online modes for their transactions and try to avoid cash transactions. Many entities want to operate as the Semi closed payment instrument issuers in India to provide facilities to their [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":5738,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[555,544],"tags":[960],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/5736"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=5736"}],"version-history":[{"count":33,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/5736\/revisions"}],"predecessor-version":[{"id":18576,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/5736\/revisions\/18576"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/5738"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=5736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=5736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=5736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}