Paytm approaches RBI to allow wallets with minimum KYC to operate after Aug 31

After having waited for so long and got some clarity from the RBI, Paytm is again in a spot with regard to the KYC norms. The next deadline, for full KYC, is August 31 and after that a large bulk of its 10 crore customers cannot carry on transactions. Paytm is now trying to find a middle path with RBI so that customers who are now categorised as minimum KYC will be able to transact post August 31, an Economic Times report states.

RBI has insisted on full KYC and for Paytm to comply, it has to spend nearly Rs 2,500 crore. This is because full KYC means having the customers’ credentials physically verified which may cost anywhere between Rs 260 to Rs 270 per customer. Paytm is therefore requesting the RBI to relax the overall terms and permit at least some payments and transactions with the minimum KYC that the digital wallet has already completed.

Minimum KYC wallets are users who have authenticated their mobile numbers by submitting any government identification without a physical verification and cross checks.

Going beyond RBI, Paytm has had a meeting with the Nandan Nilekani-led Committee on Deepening of Digital Payments to drive home its argument. Paytm is trying to convey that since there is only one source for the funds to be transferred into the digital wallet and therefore there are no complications here. The other concession that Paytm is seeking is that the customers who are on minimum KYC are allowed to make at least peer-to-peer transactions.

The issue goes back to the judgement by the Supreme Court of India months earlier on the use of Aadhaar for opening of bank accounts. The Court asked the RBI to issue guidelines to the banks and non-banking financial companies or NBFCs how to go about solving the issue of KYC. RBI has now given time till August 31 to all those digital wallets operators and NBFCs. The e-KYC method they were following for verification of their customers will not be valid after this date and only physical verification can be accepted.