“The PPI-MD does not permit loading of PPIs from credit lines,” the regulator said in its communication. “Such practice, if followed, should be stopped immediately. Any non-compliance in this regard may attract penal action under provisions contained in the Payment and Settlement Systems Act, 2007.”
This diktat by the banking regulator is being seen as an effort to clampdown on card fintech and firms operating as neo-banks who have tied up with banks to offer credit lines.
“We are evaluating this regulation and are committed to be on the right side of regulation in letter and spirit,” said Rajan Bajaj, founder and CEO of Slice. “We are working with our partner bank on this.”
As per the prevalent RBI guidelines, pre-paid instruments are allowed to be loaded using cash, bank accounts, credit and debit cards. The guidelines do not allow use of credit lines to top up these instruments.
Slice, a credit card challenger startup, said it was evaluating the regulation.
Discover the stories of your interest