When dealing with PPIs issued by non-bank organisations, the RBI is considering methods to protect client safety.

 When dealing with PPIs issued by non-bank organisations, the RBI is considering methods to protect client safety.

According to reports, the Reserve Bank is exploring a number of methods to guarantee that clients are not put at risk as a result of non-bank fintech firms' activity with relation to prepaid payment instruments (PPIs).

In a statement earlier this week, the RBI made it clear that non-bank issuers of prepaid payment instruments (PPIs) cannot fill their wallets and cards with money from credit lines or predetermined borrowing limits.

The purpose of issuing the advise, according to sources, was to protect customer safety as well as to emphasise the fact that any activity that needs a licence or authorization should not be carried out by a third party without those documents.

According to insiders, the RBI is talking with the players and considering alternatives on how to handle the matter.

The creation of a framework and increased disclosure for non-bank fintech companies producing prepaid payment instruments (PPIs) and Buy Now Pay Later (BNPL) players are among the solutions being investigated since innovation shouldn't be built on regulatory arbitrage, according to sources.

PPIs are tools that make it easier to purchase products and services, use financial services, and send money abroad using the value they store.

According to the RBI, the central bank cannot let some other companies to innovate by performing the same activity without regulation if one firm needs a licence to do so.

Additionally, reports claimed that the real sum involved is not that big.

According to sources, several of the players have shown a desire to follow the rules, but they need more time.

According to sources, all of these negotiations with the regulator are ongoing, and a decision will be made after consultation with all parties involved.

The approach is based on a non-bank fintech player receiving a card from a bank, and an NBFC engaging in regulated lending while the fintech player utilises other organisations' regulatory resources. Fintech is still not governed by any regulations.

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