As apprised by the Ministry of Electronics and Information Technology (MeitY), Government of India has initiated incentive schemes such as BHIM cash-back scheme for individuals, BHIM incentive scheme for merchants, BHIM Aadhaar merchant incentive scheme for promotion and wider adoption of digital payment.

Further, MeitY vide their gazette notification No. 6(19)/2017-DPD-1   dated 27th December, 2017 has notified the reimbursement of MDR charges on Debit cards/ BHIM-UPI and BHIM Aadhaar Pay transactions of value upto ₹ 2000 for two years effective from 1st Jan, 2018, in order to promote and enable acceptance of UPI based payments at the small and micro merchants.

Also Reserve Bank of India (RBI), as the regulator of Payment and Settlement Systems in the country, sets the necessary regulatory framework, generally, through a consultative process, to ensure that different types of payment systems thrive in the country to meet the payment needs of different segments of society. The regulatory framework has also encouraged enhanced participation of non-bank entities in the payments domain. Details of the various payment systems catering to the financial needs of society are at Annex - I.

 As apprised by Reserve Bank of India (RBI), they have issued ‘Master Direction on Issuance and Operation of Prepaid Payment Instruments (Master Direction on PPIs) dated October 11, 2017 (updated as on February 25, 2019).  Accordingly para 9.1 (i) of this Master Direction, the PPIs is allowed for a period of 18 months by accepting minimum details of PPI holder. KYC of such PPIs need to be completed within this period, else no further loading is allowed. However, the balance is allowed to be utilised for purchase of goods and services.

This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairs in a written reply to a question in Lok Sabha.

Annex - I

S.No.	Details of the various payment systems catering to the financial needs of society
1	National Financial Switch (NFS) for ATM transactions
2	Cheque Truncation System (CTS) for image-based cheque clearing
3	Express Cheque Clearing System (ECCS)
4	Immediate Payment Service (IMPS) for 24 x 7 payments
5	Cards for physical and e-commerce transactions
6	Aadhaar Enabled Payments System (AEPS) for Aadhaar authenticated payments predominantly at Business Correspondents.
7	National Automated Clearing House (NACH) for bulk and repetitive payments and receipts.
8	Aadhaar Payment Bridge System (APBS) for DBT payments.
9	Unified Payments Interface (UPI) for mobile payments; National Unified USSD Platform (NUUP) for mobile payments.
10	BHIM-Aadhaar Pay – for mobile payments for merchant transactions.
11	Bharat Bill Payments System (BBPS) – for pan-India bill payments.
12	National Electronic Toll Collection (NETC) – for toll payments.
13	National Electronic Funds Transfer (NEFT) – for funds transfer across all computerised branches of banks (member / sub-member of NEFT) across the country.
14	Real Time Gross Settlement (RTGS) system – for transfer of money from one bank account to another on a "real time" and on "gross" basis.
15	Prepaid Payment Instruments (PPIs) – for facilitating purchase of goods and services, including funds transfer, against the value stored on such instruments.
16	White Label ATMs (WLAs) – to bridge the gap in ATM infrastructure particularly in rural and semi urban areas.
17	Trade Receivables Discounting System (TReDS) – for facilitating the financing of trade receivables of MSMEs through multiple financiers.

 

Minimum KYC for prepaid payment instruments enables limited-use wallets with deferred full verification, promoting digital payments adoption. The regulatory framework permits issuance of Prepaid Payment Instruments (PPIs) on the basis of minimal customer details for a limited period, during which full KYC must be completed; if KYC is not completed within the prescribed period, no further loading is permitted though existing balances may be used to purchase goods and services. This operates alongside government incentive measures reimbursing merchant charges for small-value UPI and related transactions to promote wider adoption of digital payments.