The Reserve Back of India (RBI) has in a notification dated November 17, 2020 allowed Prepaid Payment Instrument (PPI) Issuers and Payment Aggregators (PA) to maintain one additional escrow account in a different scheduled commercial bank.
The earlier position allowed PPI Issuers and PAs to maintain escrow balance with only one scheduled commercial bank at any point of time. Now, with a view to diversify risk and address business continuity concerns, the present relaxations is allowed.
The RBI has accordingly also issued the required amendments to the Master Direction on Issuance and Operation of PPIs (PPI-MD) and the Guidelines for Regulation of Payment Aggregators (PAs) and Payment Gateways (PGs) detailed in Annex 1 and Annex 2 of the notification respectively.
The Key Highlights of the Amendments are listed below:
- PPI issuers and PAs to maintain one additional escrow account in a different scheduled commercial bank.
- Accordingly, PPI Issuers and PAs can now also credit and debit from one escrow account to the other. However, inter-escrow transfers must be avoided as far as possible and if resorted to, auditor’s certification must clearly mention such transactions.
- For PPI issuers, for a shift the escrow account from one bank to another, only a prior intimation to RBI is now required and no approval is needed.
- For PPI issuers, with regard to the quarterly and annual auditor’s certificate it is clarified that if an additional escrow account is being maintained, balances in both accounts must be considered for the certification and the same must also be indicated in the certificate. The same auditor must be employed to audit both escrow accounts.
- Similarly for PAs if an additional escrow account is being maintained, balances in both accounts must be considered for the Banker’s certificate and auditor’s certificate on maintenance of balance in escrow account and the same must also be indicated in the certificate. The same auditor must be employed to audit both escrow accounts.
Source: Reserve Bank of India
