India-based fintech Mufin Finance has been granted in-principal RBI approval for issuance of semi-closed prepaid payment instruments.
A semi-closed PPI licence allows digital banks, fintech firms, and large consumer-facing applications to roll out features such as digital payment solutions for lending.
Mufin Finance is the fourth NBFC to receive such a licence from the RBI, after brands such as Bajaj Finserve, Manapurram, and Paul Merchants.
The company is in the process of setting up building blocks for launching MufinPay, a digital payment solution which will complement its lending business. The company can now offer a wider range of complementing products for customers and build deeper partnerships with consumer companies and corporates.
PPI can come in the form of digital wallets, smart cards, magnetic chips, and vouchers. PPI acts as a store of value against which goods and services can be bought and used to transfer funds. Gift cards, payment wallets, smart cards, and vouchers are all forms of PPIs. Debit cards, however, need an open PPI licence and are issued only to banks.
Enhanced usage of PPI was allowed by RBI in August 2021, including cash withdrawal of full KYC PPI. RBI recently imposed certain restrictions on lending through non-bank PPIs.