RBI guidelines on full-KYC ‘can kill wallets’
Players to meet senior officials of the central bank to voice their concern
Prepaid Payment Instrument (PPI) players in the country such as Paytm, ItzCash, Mobikwik and Citrus will soon meet senior Reserve Bank of India officials to discuss certain concerns over the recently announced guidelines.
According to sources, wallet players are of the view that the guidelines on the stricter and mandatory Know Your Customer (KYC) norms for users of mobile wallets will be a deterrent to the growing wallet industry and that it might also “kill” smaller transactions.
The RBI, in its guidelines, said the customers wanting to move money between different wallets and banks through Unified Payments Interface (UPI) will have to provide full KYC within the next 12 months failing which they will not be able to transfer money to wallets or to banks. All existing wallet users have been asked to convert to the full KYC format by this year-end.
“They (RBI) are asking full KYC for transactions as low as ₹10,000. This will kill the industry and maybe take us back to the traditional mode of money transfers i.e. through banks,” said a source, who is a part of an industry body for wallets. Earlier, wallets used to have a minimum KYC format (by verifying the mobile number). He said the full KYC process is tedious, complicated and expensive for the wallet players and also cumbersome for many people, who have a normal bank account and use wallets for money transfers (remittances).
“They announced it during Diwali, a time when remittances are the highest. A large percentage of the wallet users for remittances is people with blue-collared jobs, taxi drivers and daily wage labourers, among others. It will be difficult for them. “So, we (all stakeholders) are meeting the RBI officials to discuss this and re-think the guidelines,” he said, adding that 60 per cent of the transactions that occur on wallets are remittances. However, a user can buy goods worth ₹10,000 and above without KYC.
Another wallet player, who did not wish to be named, said, “At a time when there are issues regarding privacy and security breach in digital transactions, a full KYC would mean that the wallets have all the personal data of a user.” The government does not ask for any KYC details to purchase gold worth ₹2 lakh and below in cash.
The meeting will also discuss the norms on making UPI compulsory for wallet players. Besides, it will discuss the guidelines restricting balance in KYC wallets (non-banking) to ₹10,000.