On 30 August 2019, the Reserve Bank of India (RBI) granted six months’ extension to Prepaid Payments Instruments (PPI) issuers, including digital wallets, to do full KYC of its customers. The move came a day before the end of the deadline- 31 August, set earlier by the Central Bank.
“It is advised that the timeline for conversion of minimum detail PPIs to KYC compliant PPIs has been extended from 18 months to 24 months. The PPI-Master Direction has been amended suitably. It may also be noted that no further extension will be granted for this purpose,” said RBI in a notification Amendment to Master Direction on Issuance and Operation of PPIs. To be sure, the Central Bank had also granted an extension of six months on 26 February 2019 in this regard.
This comes as a major relief to e-wallet companies, which had been struggling to comply with the requirement of conversion of minimum KYC to full KYC. Until now, the FinTech industry did not have any digital means to do KYC. Physical KYC’s failure and challenges associated with offline verification applications made it difficult to scale.
On 19 August 2019, the Ministry of Finance (Department of Revenue) introduced digital KYC by amending the Prevention of Money-laundering (Maintenance of Records) Rules, 2005. Based on initial consultations with the industry, the process laid out by the government for doing digital KYC appears to be cumbersome and needs simplification. We are still conducting detailed consultations with stakeholders on this issue.
In June, NASSCOM had written to RBI and different government departments/ministries such as the Department of Revenue, UIDAI, NITI Aayog, and Ministry of Electronics & Information Technology (MEITY) with regard to certain challenges that the PPI industry is facing, pertaining to KYC verification process. We had requested the regulators for a 6 months’ extension to the industry for meeting the mandatory KYC requirements, effective from the date of approval of a digital method for doing KYC. This was to ensure that the industry complies with the regulatory requirements along with offering the customers a seamless payments experience.