RBI draft PPI guidelines: Tighter norms for wallets, ₹2 lakh limit, UPI interoperability push – what does this mean

The Reserve Bank of India (RBI) has proposed a comprehensive overhaul of norms governing Prepaid Payment Instruments (PPIs), aiming to strengthen security, standardise operations, and improve customer protection in the fast-growing digital payments ecosystem. As part of this effort, the central bank has released a draft Master Direction on PPIs, inviting comments from regulated entities, stakeholders, and the public until May 22, 2026.

The proposed framework will replace the existing 2021 guidelines and introduce tighter rules for wallet issuers, prepaid cards, and other PPI operators. It applies to all authorised issuers and system participants, with a sharper focus on governance, transparency, and interoperability.

Entry norms and capital requirements

One of the key changes relates to entry and capital requirements for non-bank issuers. Entities entering the PPI space will need a minimum net worth of ₹5 crore, which must be scaled up to ₹15 crore within three years. Additionally, authorisations for payment system operators will now be granted on a perpetual basis, removing the need for periodic renewals and providing greater regulatory clarity.

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Transaction limits, usage caps

The RBI has also refined transaction limits to balance usability with risk control. Full-KYC PPIs will have an outstanding balance limit of ₹2 lakh, along with an equivalent monthly debit cap. However, peer-to-peer transfers will be restricted to ₹25,000 per month, and cash loading will be capped at ₹10,000. Small PPIs, which involve minimal KYC, will continue to operate under tighter restrictions, including a ₹10,000 balance cap, with no facility for fund transfers or cash withdrawals.

Push for interoperability

A significant push has been made toward interoperability. The RBI has mandated that full-KYC PPIs must be interoperable through card networks or UPI, enabling seamless transactions across platforms. This move is expected to enhance user convenience and deepen integration within India’s digital payments infrastructure. However, cross-border usage of PPIs remains disallowed, reflecting a cautious regulatory stance.

Dilip Modi, Founder & CEO, Spice Money, said: “The RBI’s draft PPI guidelines are a timely step to strengthen trust and discipline in the digital payments ecosystem. As the market evolves, clearer guardrails around security, grievance redressal, and issuer norms are critical for sustainable growth. While UPI leads retail payments, PPIs continue to serve distinct, high-utility use cases. In many parts of the country, their relevance is further amplified through assisted models that bridge trust and access gaps. Sharper clarity on limits and usage reinforces their role as transaction instruments. Overall, the approach strikes the right balance between enabling innovation and ensuring consumer protection.”

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Customer protection

Customer protection forms a central pillar of the revised framework. Issuers will be required to clearly disclose all charges and terms, maintain robust grievance redressal systems, and come under the ambit of the RBI’s Integrated Ombudsman Scheme. In a notable move, the central bank has directed that refunds must be credited immediately to PPIs, even if this temporarily leads to breaches of prescribed limits.

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On the operational front, non-bank issuers must maintain escrow accounts with scheduled commercial banks, ensuring that outstanding balances are matched on a daily basis. The RBI has also introduced stricter rules around inactive accounts. PPIs will be deactivated after one year of inactivity and closed after an additional year if not reactivated, with any remaining balance transferred back to the source account.