October 12, 2017

Strict KYC norms introduced to keep ewallets safe: RBI

Reserve Bank of India

An introduction of stricter Know Your Customer (KYC) norms for wallet users has been made by the Reserve Bank of India (RBI), in a set of fresh guidelines along with allowing interoperability and brining in fraud detection norms to prevent fake wallet transactions ­­ steps which will change the scope of operations for mobile wallets.

Customers can now move money between wallets of different companies and banks seamlessly through Unified Payments Interface (UPI) unless they complete full KYC formalities, like they do for bank accounts.

Mobile wallets, which have been consistent to a minimum KYC format (like a simple verification of mobile number) will have to convert to full KYC wallet within a year of opening it. All existing wallet users have to convert to the full KYC format by this year end.

The RBI said minimum KYC wallets cannot have a balance of more than Rs.10,000 and this can be allowed only for purchase of goods and services and not for remittances to other wallets or bank accounts. Full KYC wallets will have a limit of `1 lakh and all facilities for fund transfer will be allowed.

The RBI guidelines show that only serious players with deep pockets will be able to enter the payments space. “The fact that 12 months has been given for conversion of wallets into full KYC ones shows that they have enough time to convince customers to complete 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 KYC formalities done."

RBI has also increased the networth requirements for players in this space. “The higher positive networth requirement for wallets is justified because 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." RBI has also increased the limit on the amount that can be transferred from wallets to Rs.1 lakh. It also allowed inward international remittance for wallets, with an upper limit of Rs.50,000.

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