finpeel Answers · India · updated 2026-08-14
Generally yes, if you are issuing a regulated Prepaid Payment Instrument (PPI). Non-bank issuers of regulated PPIs require RBI authorisation, but a closed-system instrument usable only to buy goods or services from the issuing entity itself is not classified by RBI as a payment system requiring RBI approval or authorisation.
RBI's PPI framework covers regulated stored-value products such as eligible wallets and prepaid instruments, and the regulatory treatment depends on the type of PPI and the issuer. Banks and non-banks follow the RBI framework, with non-bank issuers requiring authorisation to operate the PPI payment system.
The closed-system exception is important. If stored value can be used only for the issuing entity's own goods or services and cannot be used for third-party payment or settlement, RBI states that the instrument is not classified as a payment system requiring its approval or authorisation.
Do not label every loyalty balance, store credit or in-app balance a regulated PPI without testing that exception and the current PPI definitions. If the wallet can be used across third-party merchants, supports transfers or provides broader payment functionality, the regulated PPI analysis becomes much more likely to apply.
Regulator: Reserve Bank of India (RBI)
Primary sources: RBI — Master Direction on Prepaid Payment Instruments · RBI — FAQs on Prepaid Payment Instruments (including closed-system treatment)
Directional — not legal advice. Verify with the regulator before committing.
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