The move comes in the light of PPIs creating wallets automatically without proper consent from customers, leading to opacity in the movement of funds. A majority of Indian digital wallets companies use the minimum details or the no-KYC (know your customer) wallet while onboarding a customer, who is being identified only by his or her mobile number. When a bank doesn’t have enough details of their customers, it is very difficult to even trace where the funds go. Indian banks are routinely fined for overlooking such critical aspects.
Another concern for the bank is the fact that PPIs target the same affluent class, which does not help the agenda of getting more people into the formal financial system. RBI also showed concerned over the fact that public on PPIs are being used only for services like remittances and recharges and not for merchant purchases as much.
The central bank also has concerns over outsourcing of back-end work to only a selected small group and also misselling by PPIs. The RBI has stopped issuing licences to new PPIs after its disappointment with the existing ones for lack of differentiation, the bank’s official concluded.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now