The monthly enhanced limit of Rs 20,000 for digital wallets has been extended till the Reserve Bank of India (RBI) completes its review guidelines for pre-paid payment instruments (PPI). However, the notification did not mention a date when the RBI would complete its review.
Earlier last year, the RBI said that it would complete its by December 31st, 2016, and for the time being, it has suspended the processing of fresh applications for prepaid payment instruments. Around the same time, the RBI also said wallets will not be allowed to change their ownership or shareholding till it finishes its review of PPI guidelines.
“During this period, change in ownership/shareholding of an existing authorised entity would be permitted only where required due to court orders, mergers or amalgamations and/or regulatory exigencies,” the RBI’s circular read.
This may mean that wallets will not be able to raise money through equity funding i.e. raising funding from investors by giving by transferring shares. However, they could possibly raise funding through debt instruments such as non-convertible debentures (NCDs). The circular also mentioned that “temporary suspension will not be applicable to applications that may be preferred by the newly licensed Payments banks and Small finance banks.”
Rule changes in November
In November 2016, following the demonetization of Rs 500 and Rs 1000 notes, the limits for wallets was increased from Rs 10,000. This will be applicable for wallets without full KYC and those with KYC will continue to have an upper limit of Rs 1 lakh.
The RBI also laid out some guidelines for merchants of wallets:
– Merchants will have to give a self-declaration of their status as a merchant. In addition, they will give details of their bank account which will be kept by the wallet issuer.
– Merchant fund transfers to bank account from their wallet will not exceed Rs 50,000
– Inflows of funds / credit to such merchant wallets shall emanate only from sale transactions of the merchant.
– Wallet issuers will clearly identify such PPIs in their systems for the purpose of maintenance of escrow, reporting and MIS requirements.
At the moment, there are 47 non-bank entities and 45 banks operating in the payments space. Most recently, JustDial got a wallet licence from the RBI.