Payments Council of India approaches government over central bank’s directive on credit lines

• The Payments Council of India (PCI) has written to the government, seeking its intervention against a central bank directive.
• The central bank had barred payment companies from loading credit lines onto wallets and prepaid payment instruments.
• The PCI has urged the government to treat wallets on par with bank accounts.

The Payment Council of India (PCI), a trade body consisting of various payment and settlement players from the country has written to the government, urging it to step in and resolve the issues created due to a recent directive by the Reserve Bank of India (RBI).

The central bank had recently barred payment companies from loading credit lines onto wallets and prepaid payment instruments (PPIs). This effectively stops companies like Slice, Unicards, Amazon Pay, LazyPay and others from offering lines.

RBI had issued the circular after commercial banks had approached it over a likely breach of rules, including KYC guidelines and anti-money laundering regulations by the fintech companies and credit-card challenger brands.

According to a report by Economic Times, the PCI has requested the government to treat wallets that comply with full know your customer (KYC) norms on par with bank accounts, allowing them to offer credit lines.

“A drawdown by the customer from a non-revolving credit line (which has been given by a regulated lender) should be allowed to be disbursed into a full KYC PPI,” the PCI said in its letter to the government.

In addition to asking the government to treat wallets that comply with full KYC guidelines on par with bank accounts, the PCI has also asked the government to allow non-revolving credit lines in full KYC PPIs.

What is non-revolving credit?

A non-revolving credit is a situation where an amount or credit facility is granted on a one-off basis and is non-replenishable. Unlike credit cards, such facilities do not have the feature of a minimum due amount and come with a clear payment schedule.

There are over 10 million active credit lines

The PCI, in its letter, has claimed that at present there are more than 10 million active credit lines where the amount has been disbursed into a PPI wallet and a card has been issued. It further added that such companies have processed over INR 3,500 crore worth of transactions in May 2022.

The PCI has used these numbers to say that PPIs have led to greater financial inclusion, helping the country move towards a cashless future.

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