RBI Once Again Extends KYC Compliance Deadline by Six Months, Decision-Based on Industry Inputs
Reserve Bank of India (RBI) on Monday has extended the deadline for completion of Know Your Customer (KYC) norms of mobile wallet users by six months, and this announcement is a big relief for the online payment companies like Paytm, Amazon Pay and other e-wallet companies three days just before its previous RBI deadline.
RBI on Monday issued notification and stated that on the basis of industry inputs the regulator has decided to initiate the step of extending deadline. RBI had earlier announced 28 February as the deadline for completion of the KYC norms for all e-wallet companies.
RBI made a statement on 25 February 2019 stating that the six-month timeline has been offered to Prepaid Payment Instrument (PPI) issuers to complete with the Know Your Customer(KYC) process. The decision to extend the timeline is based on the requests that were received from various stakeholders citing that they are facing huge problems in the e-Aadhaar work process and difficult carrying them out in a secondary system to complete the process. Due to this, the RBI regulatory panel took up the decision of extending the deadline for the third time.
Prepaid Payment Instrument (PPIs) is the instrument that simplifies the purchase of goods and services which consist of financial services and remittance facilities. PPI is pre-loaded with values and also pre-defined with the purpose of payments. The value that is stored on PPI’s denotes the value paid by the owners via cash by using a bank account. There are various modes through which the prepaid amount can be accessed such as through smart cards, internet wallets, magnetic stripe cards, mobile wallets, paper voucher, internet account, and other instruments. These instruments are licensed once and are governed by the Central Bank.
The online payment companies were concerned over the deadline that was provided by the RBI as they were disturbed and worried for not able to meet the required deadline to complete the KYC process of all customers by 28 February 2019.
The KYC compliance norms for e-wallet companies has been delayed for the third consecutive time, and it is the part of RBI’s master circular for regulation, authorization, and inspection of PPI issuers.
RBI’s master circular states that, if the PPI is used by the person or by the organization and if they fail to agree on the KYC process then they will be prohibited to load the money in the account, but they will be allowed to buy goods and services from their respective operator. Meanwhile, operators have also been instructed to offer the one-time option to the users so that they can transfer the remaining balance in the PPI to a bank account and there should be no restriction on transaction limit and no extra charges imposed.
The Industry experts say that the RBI’s guidelines on KYC are proving to be expensive and lengthy. They are also responsible for the decline of digital wallets shares in the market on the Unified Payments Interface
Industry experts further pointing out to Paytm’s blocking, the only e-wallet company that was working immensely over the massive KYC drive to support its payment bank business and other online payment companies said that they were running late to gather detailed personal information’s about their respective customers.
The senior payments industry executive mentioned that the industry ratio might be less than 10 percent of overall KYC wallets.
In the meantime, the Payments Council of India which is the industry panel for payment companies has already started to collect data from their entities so that they can influence the regulatory body and suggest for the need of an extension. RBI has offered a six-month extension which is a big positive sign for the e-wallet companies with some relief.