(Image source from: indiatoday.in)

A new option to make the daily payments has been made easier by the Reserve Bank of India. The payments at retail outlets and local shops for the purchase of household goods and services is now made easier.

Prepaid Payment Instrument (PPI) has been introduced by RBI on Tuesday which can be recharged monthly with a limit of Rs 10000 and it can be used only for retail payments.

"To give impetus to small value digital payments and for enhanced user experience, it has been decided to introduce a new type of semi-closed PPI..." an announcement was made by the central bank in press release on Tuesday. "These PPIs shall be used only for purchase of goods and services and not for funds transfer."

The issue of the newly introduced payment instrument can be done through banks and non bank PPI players. The credentials of the customers who are wanting to open their PPI accounts can be verified by these banks via an OTP which will be sent to the user’s verified mobile number and a digital identification document which is recognized by the Department of revenue, as said by the banking regulator.

The monthly limit of the card is 10,000 which can be uploaded only from the bank account which is linked with the customer’s verified mobile number. An annual limit of Rs 1.2 lakh has also been fixed by RBI which can be recharged through the accounts.

Shaktikanta Das, governor of RBI had spoken about the possible launch of the instrument in his speech regarding the Monetary Policy on December 5.

By Shrithika Kushangi