RBI’s strict KYC norms to keep e-wallets safe – The Economic Times

MUMBAI: In what could be a major change in the scope of operations for mobile wallets the Reserve Bank of India has introduced strict Know Your Customer norms for wallet users, allowed interoperability and also brought in fraud detection norms to prevent fake wallet transactions.

In a major move, now customers will be able to move money between wallets of different companies and banks seamlessly through Unified Payments Interface, provided they complete full KYC formalities like they have to do for bank accounts.

The central bank in its fresh guidelines for mobile wallets said that wallets with simple verification of the mobile number and self declaration of name and ID by the user will have to be converted into a full KYC wallet within 12 months of opening it. All existing wallet users have been given time to convert them into full KYC ones within end of this year.

Putting severe restrictions on operations of these wallets the RBI said that the minimum KYC wallets cannot have a balance of more than Rs 10,000 and be allowed only for purchase of goods and services and not for any remittance to other wallets or bank accounts. Full KYC wallets will have a limit of Rs 1 lakh and all facilities for fund transfer will be allowed.

While the wallet industry was always pushing for minimum KYC norms harping on the fact that they are only used for small value retail payments, the regulator’s fresh guidelines show that only serious players with deep pockets will be able to enter the payments space.

“The fact that 12 months time has been given for conversion of wallets into full KYC ones shows that they have enough time to convince their customers to complete their KYC requirements,” said Naveen Surya, chairman of Payments Council of India, the industry body for payments players. “I believe by then the KYC for mobile numbers can be completed and Aadhaar rails might improve making it easier to get the KYC formalities done.”

While there are various operational limitations, the RBI has also increased the net worth requirements for the players in this space. For a PPI licence companies need a positive net worth of Rs 5 crore at the time of application to be bumped up to Rs 15 crore within the third financial year of receiving the authorisation from RBI. Previously it was Rs 2 crore.

“The higher positive net worth requirement for wallets is justified because the RBI is recognising wallets as a serious financial services space,” said Vijay Shekhar Sharma, founder of Paytm. “If money will be moved across wallets of different companies they will need that higher capital to be able to support such transactions.”

Parallel to introducing certain limitations to the scope of operations, the banking regulator has also opened up new scope of activities for wallets from increasing the limit on amount that can be transferred to also allowing international inward remittances.

For money transfer limit from wallets the regulator has increased it to Rs 1 lakh from Rs 50,000 previously and also allowed inward international remittance for wallets with the upper limit of Rs 50,000 as well.

Further addressing security concerns of the sector the RBI has mandated alerts for fund transfers and balance available after completion of every transaction. The wallet entity will also need to introduce a cooling period between the loading of the wallet and the outward movement of fund to prevent fraudulent transactions. Also wallets will have to bring in a customer grievance redressal framework in a simple language to ensure transparency.

Other than normal wallets, the RBI has also introduced rules for gift instruments putting a limit of Rs 10,000 and PPIs for mass transit systems with a limit of Rs 3000.

via RBI’s strict KYC norms to keep e-wallets safe – The Economic Times

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s