Municipal corporations can issue prepaid payment instruments to staff: RBI
Mumbai, Dec 27 (IANS) Companies which are not listed on the stock exchanges as well as municipal corporations and other urban local bodies can make use of prepaid payment instruments (e.g. prepaid cards) to pay their staff, employees or contract workers, the RBI said on Tuesday.
In order to facilitate greater adoption of digital payments, banks may extend the provisions of prepaid payment instruments (PPIs) to include other employers such as unlisted corporates, partnership firms, sole proprietorships, public organisations like municipal corporations and urban local bodies to issue it to their staff, employees or contract workers, said the Reserve Bank of India (RBI) in a notification.
The modification in PPIs rules shall come into effect from Tuesday, it said.
According to the earlier guidelines PPIs could be issued only to those companies which were listed on the stock exchanges.
“Banks shall extend this facility only to those employers that have a bank account with them and after obtaining an undertaking that they are not availing of this facility from any other bank,” it said.
Verification of the identity of the staff, shall be the responsibility of the employer concerned, while the bank should put in place proper systems to capture and maintain details of the employees to whom the cards are issued by the employer along with copies of photograph and identity proof of such employees, the central bank stated.
“The employer is also required to make available details of bank accounts (if any) of the employees to the bank,” it added.