The Reserve Bank of India has announced that prepaid cards issued by banks can now be used to withdraw cash at POS terminals.
Previously, customers could only withdraw cash at POS using debit cards, but they can now withdraw up to INR1,000 ($15.3) a day using prepaid cards.
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The central bank also intends to run a pilot scheme enabling cash payments from pre-paid cards.
The Reserve Bank of India governer Raghuram Rajan, who took the role on 4 September, said: "Currently 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."
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