Mumbai: The Reserve Bank of India (RBI) on Monday refused to extend the 28 February deadline for prepaid payment instruments (PPIs) such as mobile wallets to complete know-your-customer (KYC) verification of their users. However, users won’t lose their balance amount even if KYC is not done.
KYC is a process through which financial institutions verify information about customers to ensure services are not misused.
“…sufficient time has already been given to meet the prescribed guidelines. In the event, PPI issuers not obtaining the KYC related inputs of their customers within the timeline, the customer will not lose their money. They can continue to undertake transactions for purchase of goods and services as thereto to the extent of available balance in the PPI. Reloading of the PPI and remittances can resume after completing the KYC requirement," RBI deputy governor B.P. Kanungo said in a press briefing on Monday.
On 11 October 2017, RBI issued guidelines directing PPIs to complete customer KYC by 31 December, 2017. Later, the deadline was extended till end of February at the request of certain PPI issuers.
According to Kanungo, the aim of these guidelines, which included KYC requirements, was to strengthen safety and security of transactions and customer protection.
Meeting the KYC requirement is a necessary step to pave the way for interoperability between PPIs, bank accounts and cards in a phased manner, he said.
The RBI has not yet issued operational guidelines on interoperability. According to RBI data, usage of PPIs reached a new peak in terms of both volume and value in January. The volume of PPI transactions in January was 113.6 million as compared with 99.1 million in December.
“There is definitely going to be an impact on the industry but it will be a partial and temporary one. It will take a few months for the PPI issuers to comply fully with the KYC depending on the customer base they have. In the long run, however, it will be beneficial for PPIs to get the KYC done as they can act as banking platforms due to interoperability between PPIs, banks and cards," said Vinay Kalantri, founder and managing director at Mobile Wallet Pvt. Ltd.