School/College Fees Can Be Paid Using Pre -Paid Cards: RBI

The Reserve Bank of India (RBI) allowed pre-paid card holders to make payments of school/college fees, government taxes using pre-paid card in addition to buying rail and air tickets within a prescribed limit of Rs.10,000. This is to ensure making life easier for customers of banks.

The pre-paid cards are convenient alternatives to cash and cheques, which are mainly issued by banks and NBFCs (Non-Banking Financial Companies) on payment of limited amount. RBI said that scope of the pre-paid payment instruments has been broadened and this can be clearly understood by the development in the issuance and acceptance market.

RBI said that the maximum amount of Rs.10,000 can be loaded and may be used for payment of utility bills/essential services/school fees/college fees/ air and train travel tickets/government taxes. In view of the rising inflation, RBI has increased the minimum value limit of the card to Rs.2,000 from the existing limit of Rs.1,000. However, the maximum amount that a card can hold at any given point of time is retained at Rs.10,000.

In 2009, RBI allowed pre-paid card holders to purchase travel tickets, insurance and make payments of water/electricity/telephone bills. It came up with the guidelines that pre-paid card holders are allowed to buy goods and services from different outlets.