Overview: About KYC

The Know your customer (KYC) process is critical to the user journey. It establishes the legitimacy of a user’s identity for the issuer, in compliance with RBI guidelines. KYC helps prevent identity theft, money laundering, financial fraud, terrorism financing, and other financial crimes.

Prepaid Payment Instruments (PPIs) and RBI Master Direction KYC Guidelines: Instruments that facilitate the purchase of goods and services, financial services, remittance facilities, etc., against the value stored therein. PPIs that require RBI approval/authorisation prior to issuance are classified under two types viz. (i) Small PPIs, and (ii) Full-KYC PPIs.

Small PPIs

Banks and non-banks issue small PPIs after obtaining the minimum details of the PPI holder. The regulator (RBI) lays down that:

Small PPIs are allowed to be used only for the purchase of goods and services
Fund transfer or cash withdrawal from such PPIs shall not be permitted
Small PPIs can be used at a group of clearly identified merchant locations/establishments which have a specific contract with the issuer (or contract through a payment aggregator/payment gateway) to accept the PPIs as payment instruments

Key features and limits

Bank and non-banks shall be permitted to issue such PPIs after obtaining minimum details of the PPI holder
Minimum details shall necessarily include a mobile number verified with One Time Password (OTP) and a self-declaration of name and unique identity/identification number of any ‘mandatory document’ or ‘Officially Valid Document (OVD) ID.
Such PPIs shall be reloadable in nature
The amount loaded in such PPIs during any month shall not exceed Rs.10,000/- and the total amount loaded during the financial year shall not exceed Rs.1,20,000/-
The amount outstanding and total amount debited at any point of time in such PPIs shall not exceed Rs.10,000/-
The validity of a small PPI is 24 months

Full-KYC PPIs

Banks and non-banks issue full-KYC PPIs after completing the Know Your Customer (KYC) of the user. The regulator (RBI) lays down that:

Full KYC PPIs are allowed to be used for the purchase of goods and services
Funds transfer or cash withdrawal shall be permitted

Key Features and limits

Banks and non-banks shall be permitted to issue such PPIs after completing the KYC of the PPI holder

The Video-based Customer Identification Process (V-CIP) can be used to convert Small PPIs into full-KYC PPIs
Biometric KYC can be used to conduct the KYC of a user
Such PPIs shall be reloadable in nature
The amount outstanding shall not exceed Rs.2,00,000/- at any point in time
The funds can be transferred to the own bank account of the PPI holder. Withdrawal of funds is allowed by using the following methods
1. ATM
2. MicroATMs/Cash at POS
3. IMPS/UPI to a bank account
Funds transfer shall be permitted with predefined limits