RBI Allows prepaid cards for payment of school and college fees

Updated on: Friday, June 15, 2012

To make life easier for people, the Reserve Bank allowed holders of pre-paid payment cards, to deposits school and college fees and pay taxes in addition to buying rail and air tickets within the prescribed limit of Rs 10,000.
 
The pre-paid cards, which are convenient alternatives to cash and cheques, are mainly issued by banks and  on-Banking Financial Companies (NBFCs) on payment of specified amount and are used for purchasing goods and services from limited outlets.
 
These pre-paid cards which are technically known as semi-closed pre-paid instrument, the RBI said, can be loaded with a maximum value of Rs 10,000 and may be used for payment of "utility bills/essential services/air and train travel
tickets; and recurring payment of college fees, school fees, government taxes."
 
The RBI has earlier allowed banks, NBFCs and other companies to issue different types of pre-paid payment instruments.
 
In view of the rising inflation, the RBI has decided to increase the limit of the card with minimum value from Rs 1,000 to Rs 2,000. However, the maximum limit for the semi-closed card with highest denomination has been retained at Rs 10,000.
 
These limits indicates the maximum amount that a card can hold at any given point of time.
 
RBI had earlier in 2009 come out with the guidelines for the pre-paid cards and allowed the holders to buy goods and services from different types of outlets. It had allowed holders to purchase travel tickets, insurance and pay water, electricity and telephone bills.

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