RBI’s strict KYC rules may empty digital wallets

RBI’s strict KYC rules may empty digital wallets

BENGALURU: Digital wallet companies may be staring at the end of the road as the Reserve Bank of India’s February-end deadline approaches for them to meet full know-your-customer norms for all their users.

The total number of customers who have submitted their KYC details is in ‘low single-digit’ percentage, according to industry executives. “If these norms are implemented in full force, the entire industry, which handled around Rs 12,000-crore worth of transactions in December, will be facing a major crisis,” said the chief executive of a payments company, speaking on condition of anonymity since his firm is in talks with RBI to relax the requirements.

RBI in October introduced tougher KYC norms for digital wallets, or prepaid payments instruments, making the revised guidelines mandatory for even semi-closed wallets in which users cannot load more than Rs 10,000 a month. Wallet providers not complying with the requirements within 12 months would face severe operational restrictions, it warned.

While industry body Payments Council of India has requested RBI to look into the issues plaguing the industry, there is hardly any reason to believe the regulator might reconsider imposition of its full KYC requirement, say industry experts. On Tuesday, RBI met with industry representatives and heard out their grievances related to the revised PPI guidelines.

Executives at multiple payment companies said while the digital wallet industry has been growing strongly, RBI wants them to increase use cases such as offline payments and peer-to-peer transactions. The industry is predominantly driven by domestic remittances business, which has the largest share of digital wallet transactions in India. RBI data show that of 288 million mobile wallet transactions recorded in Dec, only 99 million were towards payments for goods and services.

 

Source by gadgetsnow…

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