RBI relaxes deadline for KYC compliance of e-wallets

The RBI has extended the deadline date for KYC compliance of e-wallets by six months from the present deadline of 28 February 2019.

The Reserve Bank of India (RBI) has extended the deadline for compliance with Know Your Customer (KYC) norms for e-wallet companies. The last date for KYC compliance for these Prepaid Payment Instruments (PPI) issuers was 28 February 2019, which has now been extended by six months. 

The RBI said in a statement that stakeholders have complained about the problems they faced in undertaking Aadhaar e-KYC and requested for additional time to put an alternate system in place to carry out the compliance process. As a result, the apex bank has decided to provide an additional window of six months to the PPI issuers. The e-wallet companies were sceptical about the possibility of completing the compliance process before the original deadline and this decision should come as much-needed relief to them.

Prepaid Payment Instruments are used to purchase goods and services as well as to remit and receive money. 

Related: New RBI mandate says customers must update KYC formalities for e-wallets 

Why is e-wallet popular?

The lack of KYC was, ironically, one of the main reason why e-wallets gained popularity, particularly after the demonetisation. The encouragement given to the digital economy also attributed to its popularity. The possibility of making payments and purchases using a mobile phone has it made it a convenient option for people. It is also a popular mode of money transfer, anyone can send money to anyone else anywhere in the country by using their e-wallet balance.

Why is the KYC of e-wallet made mandatory?

As PPI issuers are operating a payment platform, the activity automatically attracts the provisions of the Prevention of Money Laundering Act, 2002. The RBI, therefore, treats PPI issuers at par with financial institutions and has made KYC norms compulsory. The e-wallet companies themselves will have to comply with the guidelines and governance mechanism laid down by the applicable acts and the RBI.

Related: What are the new Aadhaar features- virtual ID and limited KYC and how do they work? 

What is the effect of non-compliance of KYC?

If the user doesn’t get the KYC done before the due date, he or she will not be able to load any more money into the wallet. Once the remaining balance lying in the e-wallet is exhausted, the e-wallet itself will become unusable for practical purposes, till KYC is completed. 

How is the KYC completed?

Full KYC of the user is done online and in person. In most e-wallets, you can upload your KYC documents in the app itself. Documents can be address proofs like driving licence, Passport, Voter ID etc. and the PAN card. The in-person verification is being done through visits to the user’s residence or by designating KYC personnel and points of contact.

Related: How digital payment methods are changing the face of the Indian economy 

What are the benefits of getting the full KYC done?

Once you complete the full KYC you can load a higher amount into the e-wallet and your monthly spending limit also increases from Rs 10,000 to Rs 1 lakh. Similarly, the bank transfer limit and the person-to-person transfer limit also increases. Besides, you are eligible to add more beneficiaries to the e-wallet, which is three per day and 25 in total. Above all this, you need to understand your savings account. Here's everything you need to know about it.