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From 1 July, you can’t load payment wallets with credit lines


Starting July 1, all non-banking institutions would not be allowed to load credit lines to prepaid payment instruments (PPI) such as prepaid wallets and cards. This essentially means that customers will not be able to load their wallets/cards with their credit lines.
This could deal a huge blow to fintech startups such as Slice, LazyPay, Jupiter, Fi and Uni. Companies like Jupiter allow customers to load their credit line in a wallet, but firms like slice and Fi offer credit via prepaid co-branded cards issued in partnership with banks.
“The PPI-MD does not permit loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately. Any non-compliance in this regard may attract penal action under provisions contained in the Payment and Settlement Systems Act, 2007.”
According to the RBI, prepaid payment instruments (PPIs) are payment instruments, which facilitate the buying of goods and services, including the transfer of funds, financial services, and remittances, against the value stored within or on the instrument. As per the existing guidelines, pre-paid instruments are allowed to be loaded using cash, bank accounts, and credit and debit cards. The guidelines do not allow the use of credit lines to top up these instruments.
The clarification could be an effort to clamp down on card-based fintechs that give the users an option to pay later by providing a line of credit.
The RBI clarification also comes at a time when complaints against digital lending players are on the rise.
Last week, RBI Governor Shaktikanta Das said that the central bank would soon come out with a broad regulatory architecture to deal with challenges related to digital lending.
“I think very soon we will be coming out with a broad regulatory architecture, which should be able to address the challenges that we are confronted with, with regard to lending through digital platforms, many of which are unauthorised, unregistered, and, should I say, illegal,” Das said in his speech on ‘Indian Businesses (Past, Present and Future)’.



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