In a much needed respite to e-wallet companies, the Reserve Bank of India Monday extended deadline for completion of Know Your Customer (KYC) norms for prepaid payment instrument (PPI) issuers by six months.
As per RBI directions, PPI issuers were required to complete the KYC process by February 28, 2019. PPIs or mobile wallets were mandated by the banking regulator in October 2017 to capture all information required under the know-your-customer (KYC) guidelines by end February.
"Based on requests received from various stakeholders to increase the above timeline on account of difficulties in undertaking Aadhaar e-KYC and time necessary to put in place alternative systems for completing the KYC process, it has been decided to allow PPI issuers additional time of six months for completion of the KYC process," the RBI said in a statement.
The relevant provision in the PPI Master Direction has been modified suitably, the RBI notified.
Prepaid payment instruments facilitate purchase of goods and services against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holder, by cash, by debit to a bank account, or by credit card. The payment instruments can be issued as smart cards, magnetic stripe cards, internet accounts, online wallets, mobile accounts, mobile wallets, paper vouchers.
This KYC requirement is also a key cog in the RBI's push for interoperability. However, with the Supreme Court striking down Section 57 of the Aadhaar Act in October - thereby nullifying the biometric e-KYC model used by telecom companies and banks for customer verification and onboarding - and the authorities yet to zero in on a reliable alternative, stakeholders are scrambling to meet the looming RBI deadline.
The biggies in the fintech and ecommerce space like Paytm and Amazon have reportedly deployed boots on the ground to get customers to complete the KYC formalities. But the older, paper-based customer authentication mechanism is more cumbersome as well as more expensive than biometric KYC. That's because physical verification involves physical documents, which then require people to verify their authenticity.
Edited by Chitranjan Kumar