KYC RELIEF FOR PRE PAID ACCOUNTS UPTO Rs. 10,000

BE/RBINOTE/60/2019

The county’s regulator Reserve Bank of India has permitted prepaid instruments, including digital wallets, up to Rs 10,000 to be issued with minimum customer details.  This is done with an intention of boosting digital payments.

Issues Faced:

• The Supreme Court had earlier disallowed the usage of Aadhaar for remote authentication of accounts.
• Due to this, payments companies faced major challenges in enrolment of new customers and complying with KYC of the existing customers.
• Here, only “Essential minimum details sourced from customer” are required would mean that the onus of complying with “know your customer” (KYC) documentation is not compulsory.

The RBI Governor after the monetary policy announcement informed that since Prepaid instruments are playing an important role in promoting digital payments, it is felt necessary that its usage must duly be facilitated and hence, RBI proposes to introduce a new type of prepaid instrument, which can be used only for the purchase of goods and services.

Also, it is learnt that RBI will come out with guidelines for new prepaid instruments by December 31, 2019.

Here is the Difference that this prepaid instrument makes from those that have been in existence until now

• 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.
• In the past, the RBI permitted the users to create low-value wallets with basic KYC.
• However, with the increased usage of wallets by fraudsters and thus gaining illegal access to third-party accounts, RBI had made KYC mandatory for wallets.

Note:

Prepaid payment instruments are methods that 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 prepaid instruments can be issued as smart cards, magnetic stripe cards, internet accounts, online wallets, mobile accounts, mobile wallets, paper vouchers and any such instruments used to access the prepaid amount.