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RBI gives KYC relief to prepaid accounts up to Rs 10,000

Reserve Bank allowed prepaid instruments, including digital wallets, up to Rs 10,000 to be issued with minimum customer details with an aim to boost digital payments.

Worth mentioning here is that the Supreme Court had earlier
disallowed the usage of Aadhaar for remote authentication of accounts. Following this ruling, payments companies faced major challenges in enrolling new customers and doing KYC of existing customers.

The fact that only “essential minimum details sourced from customer” are required would mean that the onerous “know your customer” (KYC) documentation is not required, the Times of India quoted the RBI as saying.

“Prepaid instruments have been playing an important role in promoting digital payments. To further facilitate usage, it is proposed to introduce a new type of prepaid instrument, which can be used only for the purchase of goods and services,” RBI governor Shaktikanta Das said, after the monetary policy announcement.

The RBI will come out with guidelines for new prepaid instruments by December 31, 2019. What makes this prepaid instrument different from those that have been in existence until now is that the loading and reloading of this new instrument can only be done from a bank account and can be used for making digital transactions only, which will include bill and merchant payments, the publication mentioned.

In the past, the RBI did allow users to create low-value wallets with basic KYC. However, concerned that fraudsters were using the wallets by gaining illegal access to third-party accounts, the RBI had made KYC mandatory for wallets.

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