On April 22, 2026, the Reserve Bank of India released a draft set of rules governing Prepaid Payment Instruments (PPIs), which encompass digital wallets, prepaid cards and similar products. According to reports from NDTV Profit, the RBI called for public feedback by May 22, 2026, describing the exercise as an effort to build "a conducive framework for long term growth of PPIs with enhanced security of transactions." The draft reorganizes rules into chapters, links to 2025 KYC rules, sets clearer eligibility standards for PPI companies, and allows banks to offer PPIs without separate approval processes. The overall structure is thoughtfully designed, with the new version reorganising the rules into chapters, making them easier to navigate, and setting clearer eligibility standards for the people who run PPI companies.
The most significant changes target Full-KYC PPIs, which require complete identity verification and were previously treated as capable payments products. As reported by NDTV Profit, the draft imposes four major restrictions: users can now hold only one Full-KYC PPI at a time (previously unlimited), monthly transfer caps drop to ₹25,000 (replacing ₹2 lakh for pre-registered recipients), cash loading limits fall from ₹50,000 to ₹10,000 monthly, and a new ₹2 lakh monthly ceiling applies to both wallet balances and total monthly throughput. These changes effectively convert Full-KYC PPIs from bank account substitutes to conventional prepaid cards, potentially impacting unorganized sector workers, gig economy participants, and families receiving regular transfers. The most plausible explanation is concern about financial crime — specifically, the use of digital wallets to move money in ways that obscure its origins, sometimes through layered transfers involving multiple accounts. The draft separately blocks the practice of loading a Full-KYC PPI using a credit card, except for specific permitted purposes.
The draft removes the exemption for marketplaces that issue stored-value products only for internal purchases, potentially affecting B2B procurement portals and loyalty programme operators. According to NDTV Profit, the draft introduces confusion by appearing to ban cross-border PPI use outright while simultaneously introducing a PPI product for foreign nationals and non-resident Indians. More significantly, the draft appears to remove the facility that currently allows banks to credit incoming international remittances of up to ₹50,000 directly into Full-KYC PPIs, which served workers abroad sending money to family members without bank accounts. The draft's handling of cross-border transactions is also a source of confusion, with one section appearing to ban cross-border use of PPIs outright while introducing a PPI product designed specifically for foreign nationals and non-resident Indians, which can be loaded in foreign currency and refunded in foreign currency on departure.
The draft reflects conflicting policy impulses between structural reforms and substantive restrictions. As reported by NDTV Profit, while the reorganization and housekeeping measures are welcome, the Full-KYC PPI restrictions, cross-border ambiguity, and broad marketplace exclusion create tension with the RBI's stated aim of supporting long-term growth and Payments Vision 2028's digital financial inclusion targets. The most plausible explanation for the restrictions is concern about financial crime involving layered transfers, though the draft does not explain specific reasoning behind these changes. There is a reasonable argument that the same concerns could have been addressed through better transaction monitoring and risk-based supervision of individual issuers, rather than across-the-board product limits. The consultation window has now closed, and the final direction will tell us which of the two policy impulses in this draft won out.
