The Reserve Bank today allowed cash withdrawals of up to Rs 1,000 a day through prepaid cards, including gift cards, issued by banks from point of sale terminals, a move aimed at enhancing customer convenience in using plastic money. 

As of now, this facility was available only to debit cards issued by banks. 

The Reserve Bank said the open system prepaid payment instruments (PPIs) issued by banks is perceived to be a subset of debit cards. 

"Hence, on a review of the position, it has been decided that the facility of cash withdrawal at POS with debit cards may be extended to such open system prepaid payment instruments issued by banks in India," an RBI notification said. 

The limit of cash withdrawal will remain Rs 1,000 per day subject to the same conditions as applicable to debit cards, it said. 

Yesterday, RBI's newly appointed Governor Raghuram Rajan said that holders of pre-paid instruments issued by non-bank entities are not allowed to withdraw cash from the outstanding balances in their pre-paid cards or electronic wallets. 

"Given the vast potential of such instruments in meeting payments and remittance needs in remote areas, we intend to conduct a pilot enabling cash payments using such instruments and Aadhaar based identification," he had said. 

In 2009, the RBI had permitted cash withdrawals at POS terminals through debit cards as a step towards enhancing the customer convenience in using the plastic money.

CLICK HERE FOR CIRCULAR