RBI’s Draft PPI Directions, 2026: Major Changes Proposed

The Reserve Bank of India ("RBI") has placed the Draft Reserve Bank of India (Prepaid Payment Instruments) Directions, 2026 ("Draft PPI Direction") for comments on its website on 22 April 2026.

The RBI had issued the existing Master Directions on Prepaid Payment Instruments ("PPI MD") in 2021 to provide a regulatory framework for the issuance and operation of prepaid payment instruments ("PPIs"). PPIs are payment tools that allow the holders to buy goods and services, or send money up to the value that is already paid up against them. They are commonly issued as digital wallets, physical and virtual cards. They are divided into different categories, with differing KYC requirements, and loading and transaction limits.   

The Draft PPI Directions proposes a major overhaul of the PPI MD. The major changes proposed in the draft are set out below.

Rationalisation of PPI Categories

The Draft PPI Direction proposes to simplify the classification of PPIs into two buckets – (i) general purpose PPIs, and (ii) special purpose PPIs.  

General purpose PPIs are the PPIs for every-day retail use and fund transfers. These are further categorised on the basis of extent of customer due diligence ("CDD") and know-your-customer ("KYC") verification undertaken on the cardholders, as Full KYC PPIs and Small PPIs.

Special purpose PPIs, by contrast, are earmarked for specific activities. These include Gift PPIs, Transit PPIs, and the specialized UPI One World PPIs designed for foreign nationals and Non-Resident Indians visiting India.

Caps on Loading, Debits and Transfers

Under the current framework, users can load up to INR 50,000 in cash per month in Full KYC PPIs.  The Draft PPI Direction proposes to reduce this limit to INR 10,000 per month. This is directly aimed at curbing anonymous loading of PPIs. The draft is even more strict with Small PPIs, omitting the cash loading option altogether, for such PPIs. Further, credit card loading option is not available for general purpose PPIs.

The peer-to-peer transfer limits are also set for a major overhaul, with the current regime allowing up to INR 200,000 per month on Full KYC PPIs to pre-registered beneficiaries, whereas the draft regime proposes to cap it at INR 20,000 per month for all beneficiaries.

The Draft PPI Directions also propose to introduce a monthly limit of INR 200,000 on debits from Full KYC PPIs. No such debit limit is present in the current framework. For PPIs issued to foreign nationals and NRIs visiting India, the total amount debited during any month is proposed to be capped at INR 500,000.

Under the Draft PPI Directions, an issuer can only provide one Full-KYC PPI and one Small PPI to a customer at any point in time. This prevents a single individual from opening multiple wallets or prepaid cards with the same provider to override their monthly limits.  

Small PPIs and Gift PPIs

The Draft PPI Direction proposes to tighten the rules for Small PPIs and Gift PPIs. The maximum validity of Small PPIs is proposed to be limited to 2 years. Once it expires, the issuer must not issue another Small PPI to the same customer.

Limits are being proposed for Gift PPIs as well – under the Draft PPI Direction, they can no longer be purchased in cash and their maximum validity cannot exceed one year. Further, cash withdrawals and fund transfers will not be permitted against Gift PPIs.    

PPIs Issued by Marketplaces

Historically, entities that issue instruments only for the purpose of facilitating purchase of their own goods or services are considered as closed-system PPIs. They are not treated as payment systems requiring RBI authorization. However, the Draft PPI Direction proposes to exclude e-commerce marketplaces from this consideration. It defines marketplace as an e-commerce entity providing an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.  

Removal of Cross-border Uses

Under the PPI MD, certain cross-border use cases were permitted for PPIs, though limited in scope. The new draft proposes to ban all uses of INR denominated PPIs for cross-border transactions. This may be to address concerns of money laundering using PPIs for cross-border systems. The RBI may also be looking at a larger role for the Central Bank Digital Currency in cross-border transactions.