A PPI License is an authorization issued by the Reserve Bank of India (RBI) to entities that want to issue Prepaid Payment Instruments (PPIs). PPIs are instruments that allow users to store money digitally and use it for payments, purchases, or transfers.
Examples of PPIs include:
- Digital wallets
- Mobile wallets
- Prepaid cards
- Gift cards
In simple words, if your business wants to store customer money digitally, you must obtain an RBI PPI license.
Why is a PPI License Required?
PPIs involve handling customer funds, which impacts financial security and consumer protection. RBI regulates PPIs to ensure safety, transparency, and compliance.
A PPI License helps to:
- Operate digital wallet business legally
- Build customer trust and credibility
- Comply with RBI’s payment system regulations
- Prevent fraud and money laundering
- Partner with banks and fintech platforms
Types of PPIs in India
1. Closed PPIs
- Used only within the issuing platform
- No cash withdrawal or transfer
- RBI approval generally not required
2. Semi-Closed PPIs
- Used at selected merchants
- No cash withdrawal
- RBI authorization required
3. Open PPIs
- Allow cash withdrawal
- Issued only by banks
Most startups apply for Semi-Closed PPI License.
Eligibility Criteria for PPI License
To apply for a PPI License, the applicant must:
- Be a company incorporated in India
- Have minimum net worth of ₹5 crore at the time of application
- Maintain ₹15 crore net worth within 3 years
- Follow RBI KYC/AML norms
- Have strong IT systems and cybersecurity framework
Step-by-Step Process for PPI License Registration in India
Step 1: Company Incorporation
Incorporate a Private Limited or Public Limited Company with fintech-related business objectives.
Step 2: Capital & Net Worth Planning
Ensure minimum capital and net worth as prescribed by RBI, supported by CA-certified statements.
Step 3: Policy & Infrastructure Setup
Prepare mandatory policies:
- KYC & AML policy
- Information security policy
- Risk management framework
- Customer grievance redressal mechanism
Step 4: Filing PPI Application with RBI
Submit the application to RBI in the prescribed format along with all documents and declarations.
Step 5: RBI Scrutiny & Clarifications
RBI reviews the application and may ask for clarifications, documents, or system details.
Step 6: In-Principle Approval
RBI grants in-principle approval, allowing time to complete system readiness and compliance.
Step 7: System Audit & Compliance
Conduct:
- IT system audit
- Cybersecurity audit
- Process readiness verification
Step 8: Final RBI Authorization
After successful compliance, RBI issues final authorization to operate PPIs.
Documents Required for PPI License
- Certificate of Incorporation
- MOA & AOA
- Net worth certificate from CA
- Business plan and financial projections
- KYC/AML and IT security policies
- Director and shareholder details
Timeline for PPI License Approval
The complete process typically takes 6 to 12 months, depending on application quality and RBI queries.
Benefits of PPI License
- Regulatory Compliance: Operate legally in India
- Customer Confidence: RBI authorization builds trust
- Business Scalability: Easy expansion across India
- Fintech Partnerships: Better banking and merchant tie-ups
Common Mistakes to Avoid
- Insufficient net worth planning
- Weak cybersecurity controls
- Incomplete documentation
- Delay in meeting in-principle approval conditions
Conclusion
A PPI License is a key regulatory requirement for businesses planning to offer digital wallets and prepaid instruments in India. By following a structured step-by-step process and ensuring RBI compliance, fintech companies can build secure, scalable, and trusted payment solutions in India’s growing digital economy.
Disclaimer
This article is published for general informational purposes only and does not constitute legal, financial, or regulatory advice. RBI guidelines, eligibility criteria, and compliance requirements are subject to change. Readers are advised to consult qualified professionals or refer to official RBI notifications before applying for a PPI License.