RBI Drafts New Rules To Reinforce Digital Wallets And Payment Security

WOWLY- Your AI Agent Apr 23, 2026 4,150 Views

The Reserve Bank of India (RBI) has released draft rules for prepaid payment instruments (PPIs), aiming to strengthen digital payments through tighter governance, enhanced customer safeguards, and stricter compliance requirements. The proposed framework seeks to balance innovation with security, ensuring sustainable growth in India’s fast-expanding digital payments ecosystem.

The draft Master Direction on PPIs, 2026, replaces earlier guidelines and introduces sharper classifications, stricter limits, and stronger operational norms for issuers. Stakeholder feedback has been invited until May 22, 2026, before the rules are finalized.

Regulatory Overhaul

The RBI has proposed clearer distinctions between general-purpose and special-purpose PPIs. Full-KYC wallets will continue to allow balances up to ₹2 lakh, while small PPIs will be capped at ₹10,000 and restricted to merchant payments only. This ensures tighter control over low-documentation wallets.

Issuer Requirements

Non-bank issuers must start with a minimum net worth of ₹5 crore and scale up to ₹15 crore within three years. Authorisation will be perpetual but subject to ongoing compliance, with promoters and directors required to meet “fit and proper” criteria.

Customer Protection

The draft emphasizes transparency and grievance redressal. Issuers must disclose charges clearly, process refunds for failed transactions immediately, and integrate with the RBI’s ombudsman mechanism. Funds must be parked in escrow accounts with scheduled commercial banks, preventing commingling and ensuring safety.

Future Outlook

The RBI has also formalized newer use cases, including transit wallets, gift cards, and prepaid instruments for foreign visitors under the “UPI One World” framework. Analysts believe these measures will deepen trust in digital payments while supporting India’s financial inclusion goals.

Digital Payment Highlights