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The Reserve Bank of India (RBI) has decided to allow interoperability between e-wallets and banks through unified payment interface (UPI). This will allow customers to transfer money between e-wallet and bank accounts through UPI, in a phased manner. The central bank also tightened know-you-customer (KYC) norms for e-wallets, mandating the service providers to comply with full KYC within 12 months of opening account of a customer.
RBI says its Master Direction lays down eligibility criteria and conditions of operation for payment system operators involved in the issuance of semi-closed and open system prepaid payment instruments (PPIs) in the country. Banks are permitted to issue semi-closed and open system PPI, while non-bank entities are allowed to issue only semi-closed PPI, after necessary permission from RBI. Additionally, non-bank entities, seeking authorisation from RBI are required to have a minimum net-worth of Rs5 crore.
Navin Surya, Chairman, Payments Council of India (PCI) says, "This is third edition of reform in PPI, first one came with allowing non-banks to participate in regulated payment systems, second one came which allowed domestic remittance from PPIs to Bank Accounts. This third edition is laying foundation for PPI to become interoperable with all existing payment instruments and in par of acceptance of debit and credit cards in phases manner. This would ensure that PPIs contribution to digital payments from current share of less than 10% can move to 30-40% over the next five years."
Asking PPI issuers to comply with KYC norms for customers, RBI has directed them to maintain a log of all transactions undertaken through PPI for at least 10 years. PPI issuers will also have to file the Suspicious Transaction Reports (STRs) to Financial Intelligence Unit-India (FIU-IND).
As per the guidelines, PPIs are allowed to be loaded or reloaded by cash, by debit to a bank account, by credit and debit cards, and other PPIs. "Electronic loading or reloading of PPIs shall be through above payment instruments issued only by regulated entities in India and shall be in Indian rupees only. Cash loading to PPIs shall be limited to Rs50,000 per month subject to overall limit of the PPI. The PPIs may be issued as cards, wallets, and any such form or instrument which can be used to access the PPI and to use the amount therein. PPIs in the form of paper vouchers will no longer be issued from the date of this Master Direction except for meal paper vouchers where separate timeline has been indicated," RBI says.
As per RBI, any person can open an e-wallet through mobile number verified with one time pin (OTP) and a self-declaration of name and unique identification number of any of the officially valid documents.Officially valid document (OVD) as per RBI means passport, the driving licence, permanent account number (PAN) Card, Voter's ID Card issued by the Election Commission of India, job card issued by NREGA duly signed by an officer of the State Government, letter issued by the Unique Identification Authority of India (UIDAI) containing details of name, address and Aadhaar number.
E-wallets with minimum KYC can be loaded or used with a limit of Rs10,000 in a month, with a overall cap of Rs1 lakh per year. These PPIs can be used only for shopping of goods or payment of services and not for fund transfer to bank accounts or other e-wallet/s. These e-wallets are mandated to become fully KYC compliant within 12 months, RBI says.
For fully KYC compliant e-wallets, the limit is Rs1 lakh per month and funds can be transferred to pre-registered beneficiaries.
Bhavik Vasa, Chief Growth Officer, ItzCash Ebix, thinks the RBI should have provided more clarity on some downward revisions like limiting minimum KYC PPI to Rs10,000. "As an industry we would like to seek clarity with the regulator and understand better on reasons for a few downward revisions and limits, like minimum KYC PPI limit of Rs10,000 and also gift cards, which are non-cash out instruments and cash loading of PPI limit. These may limit our fight against physical cash in the economy, especially when we can buy gold up to Rs2 lakh with cash in our country," he says.