wallet

The Reserve Bank of India (RBI) has issued guidelines for digital wallet companies  to surrender their licences and details how wallets will have to refund money to their users.  The RBI said that it has been receiving requests from prepaid payment instrument (PPI) issuers and overseas money transfer operators for surrendering and canceling of their licences on a voluntary basis.

So far, the RBI says that it is in the process of winding down three wallet providers – Beam Money, Done Card Utility and OSS Payment solutions. In July 2013, Beam Money surrendered its licence to the RBI and  at the time Anand Shrivastav, Chairman at Beam Money told MediaNama that semi closed prepaid wallets did not make financial sense to the company. One of the major drawback, he said, was that it did not allow users to withdraw money from the wallet, which is important for a consumer company.

Kaizen that operated RFID based SmartCards had its revocation order issued in April 2011.

The guidelines

For payment operators who have started their operations: The following documents need to be submitted to the RBI for winding down operations

  • A request in writing by its authorised signatory, along with a copy of a board resolution, indicating its intent and the reason for such voluntary surrender of certificate of authorization.
  • A statement by its chartered accountant giving the number and amount of outstanding wallets. Such statement should also indicate the name of its Escrow account details, outstanding Escrow amount, and liabilities to merchants.
  • A memorandum indicating the process to be adopted for repaying funds to the customer or merchants. This should also include the processes and time-line for repaying the outstanding amount to customers and merchants.
  • Companies will then have to issue a public notice in English, Hindi and a vernacular language in the print or visual media stating to its customers and merchants its intent to close down operations.
  • The notice will also indicate that customers can spend the amount in wallets or opt for a refund to their bank accounts within a time period. It should also contain information of the nodal officer and the mode of receipt of such requests for redemption.
  • For refund to wallet customers, the escrow account bank will allow a one time refund of the balance to the bank account.

Money loaded to wallet via cash:  However, we noticed that the RBI has not provided any details for people who loaded their wallets using cash as is in the case of Oxigen, ItzCash, Paytm and MobiKwik. These services usually work as money transfer services for migrant labourers etc who use load the money to wallets in offline stores via cash and many times do not have a bank account. We have written to the RBI asking for a clarification and update once we hear from them.

For payment operators who have not commenced operations: The following documents need to be submitted:

  • A request in writing by its authorised signatory, along with a copy of its recent board resolution, indicating its intent and the reason for voluntary surrender.
  • Any other supporting  documents like cancellation of the associated project, etc.
  • A certificate from its chartered accountant in saying that the company has not commenced and operations.
  • A copy of the latest audited balance sheet of the entity.