The banking regulator, Reserve Bank of India (RBI) is planning to issue guidelines allowing banks and qualified non-banking entities to issue prepaid instruments that would enable people to make purchases and withdraw cash from ATMs.

These pre-paid instruments would be floated by the banks and NBFCs once the RBI issue the norms. Some of these instruments would include smart cards, magnetic strip cards, internet accounts, internet wallets, mobile accounts, mobile wallets and prepaid vouchers.

RBI has taken a decision regarding the issue of an operating guideline after receiving a proposal that seek to allow banks and eligible NBFCs to issue pre-paid vouchers up to Rs 50,000.

The store value in these instruments will be equal to the money paid by its holder through cash or by debit or credit card. "It is now proposed to permit SCB (scheduled commercial banks) which comply with eligibility criteria to issue all categories of prepaid instruments," said RBI in its annual policy review.

Further RBI said that even eligible non-bank entities including NBFCs have been allowed to issue semi-closed instruments which can be used to "purchase all types of goods and services at an identified network of establishments".

The semi-closed instruments would comprise of vouchers that can only be traded at select establishments. These establishments would be those that had earlier joined hands with the issuer for honouring such instruments.

RBI has also mentioned that the maximum amount in any of such instrument would be Rs 50,000. "The maximum value of any prepaid payment instrument (where specific limits have not been prescribed) shall not exceed Rs 50,000," stated the RBI.