are applicable to the banks. in particular, as the functionalities of ppis form an ongoing relationship, comparable aml / cft obligations will have to apply. that is the reason we have been following a risk based approach within the extant aml framework for ppis. we will continue to evolve our guidelines balancing the demand of the ppi industry and extant aml framework. while doing so there are a few aspects to remember. it must be remembered that the schemes cited in other countries cannot be replicated in india in toto. the risk perception while issuing ppis up to usd1000 without kyc in usa may not be same as the risk perception associated with ppis up to rs. 50, 000 / – in india. the permissible limits, top ups and reloadability will depend not only on the purchasing power but also on systems in place to address the risk in terms of strong enforcement and compliance framework. one of the reasons cited for replacing cash with ppis is the trails that ppis will provide. however, it is essential that ppi issuers are in a position to deliver the requisite trails. in some of the cases we have observed there is no proper system to track the card issuance let alone system for tracing the transaction trails. to put it more directly, in a mobile based prepaid system, this auditability is more straight forward if there has been proper adherence to rules while issuing sim cards since minimum kyc standards are prescribed now. the national identity scheme needs to be vigorously integrated with the payment systems to create the necessary synergies. the industry may need to examine how quickly the aadhaar scheme could be used to address the identification and authentication requirements. while this process is ongoing, caution has to be the better part of valour. so, while the demand for relaxation of kyc is well taken, the industry should work on improving the system for providing the necessary trace and transaction trails. there have been demands for increasing the transaction limits. increasing transaction limits by compromising on the kyc would be a risky proposition given its susceptibility to money laundering. as you will be aware increase in transaction limits will need proportionate increase in safety and security of transactions as applicable to other card schemes in the form of an additional factor of authentication. the industry needs to deliberate more actively on this issue and we as a regulator would be willing to act as a catalyst in the process. creating awareness – is the industry doing enough to increase the

the inception of the pss act and issuance of guidelines in april 2009, 21 non - bank entities have been authorized for ppi issuance exclusively of which 18 are issuing ppis, while the other 3 non - bank entities are in the process of doing so. apart from authorization, rbi has also proactively undertaken policy measures in consultations with stakeholders to encourage the growth of the industry. while doing so, we have always kept the management of risks and addressing aml concerns as a cornerstone of our policy. based on this approach, we have ushered in several rationalisation measures. but as we all know, while the regulator can act as a catalyst, it is the issuers who have to hit the ground running. third, have the industry associations done what could have been done? are we focusing too much on so called stumbling blocks and regulations instead of channelising our energies in achieving the required scale of operations? let me not pre - judge. but, may be it is time for more introspection. let me now flag certain important issues which i hope would be discussed over the course of next two days. payment system innovation and role of non - banks payment system providers the increased role of non - bank entities in payment system is linked to their potential to change the payment system landscape as they can leverage on their product offerings with latest technological features to cater to wide segment of the market. has this taken place in india? as can be seen from statistics, the share of ppis in the overall retail segment though growing is yet to achieve a significant level. if we analyse the types of ppis being issued, paper vouchers constitute the major share of pre - paid payment instruments with 73. 40 percent. the relative share of others is magstripe cards : 16. 59 percent ( mostly issued by banks ), m - wallets : 9. 94 percent and e - wallets : 0. 07 percent. what is the innovation that has taken place if paper ppis are merely acting as a substitute for cash? similarly, why are micro payments with ppis not been successful even though regulations are not stringent in this segment? kyc requirements for ppis issued up to rs. 2000 / – as well as utility payment ppis are quite relaxed. why then have ppis not been successful in at least these segments? do we have any credible answers? promoting access and inclusion in our vision document we have laid emphasis on access and inclusion. we have been