In the second week of October, the RBI introduced stricter norms for PPIs, as per which users of mobile wallets had until the end of this year to convert to the full KYC format. In a new development, the country’s central banking institution is currently “looking into” requests for an extension of the deadline. In the interim period, the RBI reportedly received multiple requests from mobile wallet companies to extend the deadline. the Reserve Bank of India (RBI) has granted them two more months (till February) to complete ‘know your customer’ (KYC) compliance of existing users.
As per the new guidelines, mobile wallets, which have been conforming to a minimum KYC format (such as simple verification of mobile number) will have to convert to full KYC wallet within 12 months of opening it. All existing wallet users have to convert to the full KYC format by this year end. Full KYC means that the companies are required to collect “self-declaration of name and unique identification number of any of the officially valid documents.” To that end, most of the prepaid payment instruments operating in India are now asking users to link the wallets with their respective Aadhaar numbers.
Immediately after the norms were instituted, multiple digital payment companies reportedly joined hands and seek changes in few of theproposed guidelines. The major points of concern raised by the payment companies were those pertaining to demand for a mandatory full KYC or know your-customer certification, phased introduction of interoperability and restriction of peer-to-peer fund transfer in semi-KYC wallets.
Another problem cited was prohibition of inter-wallet transactions, along with the transfer of funds from bank account to wallet from semi-KYC accounts. Last month, the RBI invited prominent bankers to deliberate over the impact the norms would have on the country’s digital payment sector.
Incidentally, the PCI had originally welcomed the norms set by the RBI, with its Chairman Navin Surya stating at the time, “This is the third edition of reform in PPI, first one came with allowing non-banks to participate in regulated payment systems, the second one came which allowed domestic remittance from PPIs to Bank Accounts. This third edition is laying the foundation for PPI to become interoperable with all existing payment instruments and at par with debit/credit cards in a phased manner.”
Through the KYC norms, the country’s central banking institution is aiming to curb instances of fraud and eliminate risks. However, some players in the industry fear that the stricter KYC guidelines could stifle the industry’s long-term growth. Whether the RBI decides to extend the deadline of mobile wallets remains to be seen.