RBI okays Bajaj Finance's foray into prepaid payment business
Last week, the company reported a growth in its consolidated profit for the fiscal year 2021, rising from Rs 948 crore in FY20 to Rs 1,347 crore in FY21.
May 05, 2021 / 05:53 PM IST
Bajaj Finance is all set to join Paytm and Amazon in the prepaid payment business as the RBI (Reserve Bank of India) has approved the company’s foray into the segment with perpetual validity. This will become a part of Bajaj Pay, which is the company’s bid to provide an integrated platform for all payments solutions.
"We wish to inform that the Reserve Bank of India vide its letter dated 4 May 2021, has granted an authorisation to the Company for issuance and operation of semi-closed Prepaid Payment Instruments with perpetual validity," the company informed in an exchange filing on May 5.
Last week, the company reported a growth in its consolidated profit for the fiscal year 2021, rising from Rs 948 crore in FY20 to Rs 1,347 crore in FY21. Currently, RBI has authorised only around 70 banking and non-banking entities in India to operate in the PPI (Prepaid Payment Instruments) segment.
What are Prepaid Payment Instruments (PPIs)
Simply put, PPIs help you avail goods, services, fund transfers and remittances against a pre-stored value on the instrument. While Bajaj Finance gears to enter the semi-closed PPI system, which happens to be most common and widely used, RBI has actually categorised three kinds of PPIs.
Closed System PPIs: These PPIs do not allow for cash withdrawals or third party fund transfers. You can use the system in order to pay for availing goods and services only against a specific merchant or entity.
Semi-closed System PPIs, on the other hand, offer a greater range of merchants and establishments. You can make payments to multiple merchants/ vendors through the system. Cash withdrawal, though, is still prohibited. PPIs up to Rs 10,000 require minimal KYC requirements, whereas if you go up to Rs 1,00,000, which is the maximum limit, you will be required to complete all KYC formalities. Pre-Covid GrowthOn the business front, Bajaj Finance has been reporting robust numbers, with the loan generation section speeding up. Except for the two-wheeler financing segment, which has been the most affected due to the ongoing pandemic and lockdown restrictions, most other segments are back on track, with a good prospect for long-term growth.