No credit line on prepaid wallets: What it means for users and wallet companies

In a move that could affect several fintech players, the Reserve bank of India Tuesday asked non-bank prepaid instruments (PPIs) issuers to not load these with a credit line, a preset borrowing limit.

The signal from India’s central bank seems to be that it wants to put a full stop to buy-now-pay-later (BNPL) wallets which typically tie-up with banks or Non-Banking Financial Companies (NBFC) and offer credit lines or a short loan into the prepaid wallet. The problem is that many times users don’t realise the wallet amount is a loan and end up paying a high interest for the money spent.