Bajaj Finance Ltd. has got the go-ahead from the Reserve Bank of India to launch a digital wallet. “The Reserve Bank of India vide its letter dated May 4, 2021, has granted an authorisation to the company for issuance and operation of semi-closed prepaid payment instruments (PPI) with perpetual validity,” the non-bank lender informed the stock exchanges on Wednesday.
A semi-closed PPI is effectively a digital wallet but one through which transactions can flow to entities other than the one which offers the wallet services.
Approval to Bajaj Finance for offering a wallet comes with perpetual validity suggesting it will not have to seek approval every year from the RBI, as was earlier stipulated.
The launch of Bajaj Finance’s digital wallet is part of a broader strategy by the consumer NBFC to expand its digital finance offerings. The company has been rolling out ‘Bajaj Pay’ in phases to expand into the payments segment.
In its quarterly investor presentation, the company said Bharat Bill Pay System went live on Bajaj Pay in January. A fully functional UPI payment option is likely to go live in May. This will now come alongside the launch of the digital wallet, since the RBI approvals have been received. It also intends to launch marketplaces for investments and insurance products.
To be sure, digital wallets have lost popularity over the last couple of years after UPI was introduced.
However, in April, the RBI changed rules for digital wallets, which may help improve their usage. Customers of these wallets can now store larger amounts of money up to Rs 2 lakh and withdraw cash from them even if they aren’t linked to a bank. All wallets will have to become interoperable so you can transfer funds from one to the other, the RBI has said. Also, non-bank wallets will have access to the real-time gross settlement and the National Electronic Fund Transfer, which are the backbones of the payment system.