Now, firms can pay employees through prepaid cards

To facilitate greater adoption of digital payments, the Reserve Bank of India (RBI) on Tuesday allowed banks to issue prepaid instruments to any institution that can be given to their employees. 

Earlier, this facility was available only for listed companies. The central bank modified a clause in its circular for prepaid instruments, allowing employers such as “unlisted corporates, partnership firms, sole proprietorship, public organisations like municipal corporations, urban local bodies, etc, to issue prepaid instruments for their employees.

However, the institutions receiving the prepaid instruments should have accounts with the issuing banks and should not avail such instruments from any other bank, RBI said. 

 

The employer would be responsible for the verification of the identity of the employees, contract workers, etc.

“The bank should put in place proper systems to capture and maintain details of the employees to whom the cards are issued by the ‘employer’ along with copies of photograph and identity proof of such employees,” RBI said, adding, the employer should also make available details of bank accounts (if any) of the employees to the bank.

The prepaid instruments would be loaded/reloaded by the banks after necessary authorisation of the employers, the notification said.