The rising and buoyant story of Digital India and Digital Transactions in India can come to screeching halt next month.
If we read between the lines, then around 90% of Indian wallets can be left immobilized starting March 1st, 2018.
And RBI seems the culprit here.
90% Of Digital Wallets Will Be Emptied?
In October last year, Reserve Bank of India had issued strict guidelines for digital wallet operators in India and gave them a deadline of year-end to comply with KYC norms for all users.
The deadline was later extended until February 28.
As per insiders, KYC norms for digital wallet subscribers is at an all-time low. Wallet users who have submitted their KYC details to the wallet firms are at low ‘single-digit’ percentage, as of now.
And only 8 days are remaining for this month to end.
Even if we assume that 10% of all wallet users have submitted their KYC details, it leaves 90% of non-KYC users. And as per RBI’s strict rules, non-KYC users cannot transact or keep more than Rs 10,000/- in a month in their wallet.
Hence, 90% of the wallets can be emptied or left immobilised next month.
A senior executive with a mobile wallet firm said,
“If these norms are implemented in full force, the entire industry, which handled around Rs 12,000-crore worth of transactions in December, will be facing a major crisis,”
Besides KYC rules, RBI has introduced several other regulations as well. For instance, increased initial net worth requirement to Rs 5 crore, from Rs 2 crore for the wallet companies.
Is RBI Being Too Strict Here?
As per industry players, RBI is being too strict here, and they can relax the implementation of rules to aid the expansion of digital wallets.
If brakes are applied now, it can have some serious long-term negative side-effects.
Almost all the mobile wallet companies are on the same page here.
As per Sriram Jagannathan, vice-president (payments), Amazon India, such strict KYC rules for small-time users are not required.
He had earlier said,
“We urge the regulator to re-examine this in line with international guidelines, and adopt a framework of proportional KYC,”
On the issue of strict RBI rules, Bipin Preet Singh, founder of MobiKwik had said,
“It is a little surprising. We had expected RBI, having reduced the limits for minimum-KYC wallets to Rs 10,000, will allow them to continue,”
As per Jitendra Gupta, MD of PayU India, such strict RBI rules essentially ‘destroys the very idea’ of wallets. NPCI is in talks with RBI regarding this issue, as they expect them to be somewhat lenient on KYC matter.
Digital transactions in India has just crossed the $2 trillion mark, and the rise of mobile wallets along with UPI has been encouraging. RBI should actually re-think on the KYC issue, and let wallets prosper at this crucial juncture.
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