RBI's Draft Wallet Rules Could Reshape India's Digital Payments Industry

The Reserve Bank of India (RBI) has proposed a new framework for Prepaid Payment Instruments (PPIs). The draft introduces stricter rules for digital wallets, prepaid cards and related payment products.

According to the central bank, the objective is to improve transaction security and create a stronger regulatory framework. However, industry players say some of the proposed changes could significantly reduce the role of digital wallets in India's payments ecosystem.

The consultation period for the draft ended on 22 May, and the final rules are now awaited.

Key Restrictions On Full-KYC Wallets

The most significant changes relate to Full-KYC PPIs, which currently allow users to conduct a wide range of transactions after completing identity verification.

Under the draft framework:

• Users may be allowed to hold only one Full-KYC wallet at a time.

• Peer-to-peer transfers would be capped at ₹25,000 per month.

• Cash loading limits would fall from ₹50,000 to ₹10,000 per month.

• A monthly ceiling of ₹2 lakh would apply to both wallet balances and transaction throughput.

Individually, these changes may appear modest. However, together they could reduce the utility of wallets for users who rely on them for salary receipts, bill payments and family remittances.

What It Means For Paytm And Other Wallet Operators

The proposed restrictions could have important implications for listed digital payments companies whose businesses have historically included wallet-based services.

For One97 Communications, the parent company of the Paytm platform, the direct impact may be less severe than it would have been a few years ago.

Similarly, One MobiKwik Systems may face closer investor scrutiny because digital wallets remain a more visible part of its consumer payments offering. Any reduction in wallet usage could affect transaction volumes and customer engagement metrics, although the company has also diversified into credit, insurance and financial services.

Private players offering wallet services, including platforms operated by major fintech firms and e-commerce companies, could also see compliance costs rise if the final rules remain unchanged.

Also Read - RBI Allows Loans Against NRI Forex Deposits To Boost Inflows

Marketplace Wallets Could Face Fresh Compliance Burden

Another notable proposal removes an exemption currently available to certain closed-loop wallets operated by marketplaces.

Under the draft rules, online platforms that hold customer balances could require RBI authorisation even when those balances are intended only for purchases within their own ecosystems.

While the move could strengthen oversight of large platforms, legal experts believe the definition of "marketplace" is broad enough to potentially affect B2B procurement portals, service aggregators and loyalty programmes.

Source:

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