RBI PPI Rules for Wallet Apps: KYC Tiers, Limits and Licence

In short

Under RBI's Master Directions on PPIs (updated as on 30 September 2026), a small PPI holds at most ₹10,000, a full-KYC PPI at most ₹2,00,000; non-banks need RBI authorisation.

1. What a PPI is and why product teams care

A prepaid payment instrument (PPI) is the RBI term for a stored-value product: a wallet, a prepaid card, a gift card. If your app holds customer money before it is spent, even for a short time, you are close to this regulation. The rule book is the Master Directions on Prepaid Payment Instruments, first issued on 27 August 2021. RBI's page shows it as updated on 30 September 2026.

Banks and non-banks can issue PPIs, but only "after obtaining necessary approval / authorisation from RBI under the Payment and Settlement Systems Act, 2007." A non-bank applicant "shall be a company incorporated in India". A startup that does not want to become an issuer can partner with one. In that case the partner's limits and compliance duties shape what your product can do.

2. The two KYC tiers

The directions split PPIs by how much KYC the holder has completed. The limits differ sharply.

	Small PPI	Full-KYC PPI
How it is opened	Minimum details: mobile number verified with OTP, self-declared name, and an ID number from an officially valid document	Full KYC (video-based identification is allowed)
Most you can hold	₹10,000 outstanding at any time	₹2,00,000 outstanding at any time
Most you can load	₹10,000 in a month and ₹1,20,000 in a financial year	Within the ₹2,00,000 outstanding limit
Cash withdrawal or transfer out	Not permitted	Allowed within limits below
Conversion	Cash-loaded small PPIs must convert to full KYC within 24 months	Not applicable

The small PPI wording in the Master Direction is direct: "Cash withdrawal or funds transfer from such PPIs shall not be permitted". For conversion, small PPIs with cash loading "shall be converted into full-KYC PPIs (as defined in paragraph 9.2) within a period of 24 months", failing which no further credit is allowed in such PPIs.

Video-based customer identification (V-CIP) can be used "to open full-KYC PPIs as well as to convert Small PPIs of paragraph 9.1 into full-KYC PPIs". For a growth team, that is the upgrade path: a user starts small, then converts in the app without a branch visit.

3. Money out of a full-KYC PPI

Full-KYC PPIs can send funds, within two caps:

Up to ₹2,00,000 per month per beneficiary when the beneficiary has been pre-registered by the holder.
Up to ₹10,000 per month in all other cases.

Cash withdrawal for a non-bank issuer is allowed "upto a maximum limit of Rs.2,000/- per transaction". Bank-issued PPIs follow a separate point-of-sale rule in the same paragraph, so check the text if you are a bank partner.

Design consequence: if your wallet promises to pay out to new payees, the ₹10,000 monthly cap applies until the user registers the beneficiary. Build the registration step before the payout step, and show the remaining monthly limit.

4. What the issuer must hold and keep

Two rules matter when you evaluate a PPI partner or plan your own licence.

Net worth. Non-bank issuers need a minimum positive net worth of ₹5 crore at the time of application, per the latest audited balance sheet. After the third financial year from final authorisation they must maintain ₹15 crore at all times.

Escrow. A non-bank PPI issuer must keep the outstanding balance in an escrow account with a scheduled commercial bank. The balance in that account "shall not, at the end of the day, be lower than the value of outstanding PPIs".

If you are comparing build against partner, ₹15 crore of net worth is the capital bar to clear, and the user float sits in escrow.

5. Features you can promise users

Several rules shape the product directly:

Interoperability. "Where PPIs are issued in the form of wallets, interoperability across PPIs shall be enabled through UPI." A full-KYC PPI can let its holders make UPI payments by linking the PPI to the issuer's UPI handle.
Closing. The issuer "shall give an option to close the PPI at any time." Put a visible close option in settings.
Validity. All PPIs "shall have a minimum validity period of one year".
Special-purpose PPIs. Gift PPIs are capped at ₹10,000 each, and PPI-MTS instruments at ₹3,000 outstanding.

6. Product checklist

[ ] State on the signup screen which tier the user is in and what it allows.
[ ] Track months used and remaining for the 24-month conversion window on small PPIs with cash loading.
[ ] Offer in-app V-CIP upgrade when the user is near ₹10,000 balance or monthly load.
[ ] Block a load that would take the balance above the tier's cap, with a clear message.
[ ] Ask beneficiaries to be registered before payouts above ₹10,000 a month.
[ ] Confirm with your issuer partner which limits they set below the RBI ceiling.
[ ] Keep a close-account path and refund flow in settings.

RBI's older FAQ on PPIs (22 November 2022) lists the same small-PPI and full-KYC limits. Always read the current Master Direction text before you commit a design.

This page summarises public RBI documents. Check with a payments lawyer before you apply for authorisation or launch a stored-value product.

Questions people ask

What is the maximum balance in a wallet in India?

₹10,000 for a small PPI and ₹2,00,000 for a full-KYC PPI, under the RBI Master Directions on PPIs. An issuer can set lower limits.

Can a wallet send money to a bank account?

A small PPI cannot. A full-KYC PPI can, up to ₹10,000 a month in general and up to ₹2,00,000 a month per pre-registered beneficiary.

Does a non-bank wallet company need an RBI licence?

Yes. Non-bank issuers are companies incorporated in India that get authorisation from RBI under the Payment and Settlement Systems Act, 2007.

How much capital does a PPI issuer need?

A positive net worth of ₹5 crore at application and ₹15 crore, maintained at all times, after the third financial year from final authorisation.

Sources

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