With the growing unease of using Aadhar for verification of Know Your Customer (KYC) norms, the fact that the RBI has extended the deadline for Prepaid payment instrument (PPI) issuers to collect KYC has come as a huge relief for them. The earlier deadline was set for February 28 2019, by which all such PPI issuers or mobile wallets were to collect KYC information of their customers. However, this is easier said than done.
The KYC process was introduced by the RBI way back in 2002. Under this, all bank account holders are to give their photo and address identification proofs to their banks for verification. This was done to prevent any type of financial fraud using bank accounts.
These PPI issuers or ‘fintech’ companies relied heavily on Aadhar to complete their customers’ KYC. However, all of this changed when the Supreme Court struck down Section 57 of the Aadhar Act last year. This made it more difficult for such companies to complete the KYC processes. They were actively looking at alternatives for this. This relief has helped these fintech companies to complete the KYC process in a much easier manner.
Relief for online payment companies – KYC compliance deadline extended by 6 months
“Based on requests received from various stakeholders to increase the above timeline on account of difficulties in undertaking Aadhaar e-KYC and time necessary to put in place alternative systems for completing the KYC process, it has been decided to allow PPI issuers additional time of six months for completion of the KYC,” read the RBI notification.
The Payments Council of India, a body representing these PPI issuers and fintech companies, had requested the Regulator in October 2018 for extending the deadline to convert all the minimum KYC accounts to full KYC accounts to February 2020, as getting the KYC’s done without Aadhar verification would take a lot of time.
Sans Aadhar, big PPI issuers, and