The PPI Master Direction sets forth certain eligibility criteria and conditions for the operation of a payment
system involving PPIs in India. The PPI Master Direction also contains a framework for the regulation and
supervision of persons operating such payment systems. A non-bank entity seeking authorization for issuing
PPIs is required to be incorporated in India and have a minimum positive net worth of %50 million according to
its latest audited balance sheet at the time of submitting the application. The application is then processed by
RBI on the basis of this net-worth which is required to be maintained at all times. By the end of the third
financial year from the date of receiving final authorisation, the entity is required to achieve a minimum positive
net worth of 2150 million. The PPI Master Direction also specifies, inter-alia, limits with respect to the value
that can be stored on the various categories of PPIs, co-branding of PPIs and applicable KYC norms.

The PPI Master Direction requires implementation of interoperability of PPIs in three phases: (a)
interoperability of PPIs issued in the form of wallets through UPI; (b) interoperability between wallets and bank
accounts through UPI; and (c) interoperability for PPIs issued in the form of cards through card networks.
Pursuant to a circular dated October 16, 2018, the RBI had provided operational guidelines for interoperability,
ite., certain additional requirements for achieving interoperability through wallets, card networks and UPI. The
PPI Master Direction has made it mandatory for PPI issuers to give the holders of full KYC-compliant PPIs
interoperability through authorised card networks (for PPIs in the form of cards) and UPI (for PPIs in the form
of electronic wallets). Such interoperability is required to be enabled by March 31, 2022. Further, the RBI has
now permitted cash withdrawal using full KYC-compliant PPIs of non-bank PPI issuers, subject to certain
conditions such as (i) maximum withdrawal limit of 22,000 per transaction and an overall limit of 10,000 per
month; (ii) cash withdrawal using a card/ wallet requiring additional factor authentication/ PIN based
authentication; (iii) the PPI issuer offering such facility putting in place proper customer redressal mechanisms.
and (iv) the implementation of a cooling period between opening of the PPIs or loading/ re-loading of funds into
PPIs to mitigate fraudulent use. Additionally, the maximum amount outstanding in respect of full KYC-
compliant PPIs has been increased from 2 0.1 million to 0.2 million.

Through a circular dated January 4, 2019, the RBI has issued directions relating to unauthorized electronic
payment transactions in PPIs of non-bank entities. Such directions include, inter alia, regular SMS/e-mail alerts
for payment transactions to customers, limited liability of customers for unauthorized payment transactions,
reversal timeline of 10 days from the date on which a notification is received from a customer regarding an
unauthorized transaction. PPI issuers are required to formulate a customer relations policy to cover aspects of
customer protection, including the mechanism of creating customer awareness on the risks and responsibilities
involved in electronic payment transactions and customer liability in such cases of unauthorized electronic
payment transactions. The burden of proving customer liability in case of unauthorised electronic payment
transactions will lie on the PPI issuers.

Off-site ATMs

Pursuant to a notification dated June 12, 2009, the RBI has permitted scheduled commercial banks to install off-
site ATMs without the prior approval of the RBI, subject to compliance with certain conditions. Pursuant to the
master circular on branch authorization issued by the RBI on July 1, 2014, as amended (“Branch
Authorization Master Circular”), read with Rationalisation of Branch Authorisation Policy — Revision of
Guidelines dated May 18, 2017, such conditions include, inter-alia, the following:

e The business transacted at such ATMs is required to be recorded in the books of the respective branch, base
branch, or centralized data centre;

e Banks are permitted to post suitable staff member(s) to provide guidance to the customers at such ATMs;

¢ The bank is required to make adequate stand-by arrangements to meet the cash requirements of such ATMs;

«The bank is required to ensure that only properly sorted and examined notes are put into circulation through
such ATMs;

e Third party advertisement on the screen or network of such ATMs, including any display of products of
other manufacturers, dealers or vendors is not permitted. Banks are however permitted to use such ATM
screens to display their own products;

e ATMs installed in SEZs are permitted to dispense or collect only Indian Rupees; and

« The bank is required to report complete details of such ATMs to the RBI within two weeks of
operationalizing such ATMs.

Banks are permitted to provide a range of services through such ATMs, including cash deposits or withdrawals,
PIN changes, request for cheque books, statement of accounts, balance enquiries, inter-account transfers within
the bank, inter-bank fund transfers, mail facilities to send written communication to the bank, utility payments
and provide product information.

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