There are 55 non-banking PPIs operational now, apart from 50 wallets promoted by banks. They were initially given time till December 31, 2017 to make those accounts KYC-compliant, which was extended to February 28.
According to reports, PPIs were feeling that the KYC requirement was very challenging and if the guidelines were to be implemented, they feared losing business as 90 per cent customers have been onboarded using the minimum KYC, which is giving the telephone number.
The PPI industry also feels that if KYC is done for mobile phones, the same should take care of security concerns.
"The guidelines are designed to strengthen safety and security of transactions and customer protection," Mr Kanungo said, adding that KYC requirements are necessary to usher in inter-operability.
Apart from paying for purchase of goods and services, PPIs are used extensively for remittances currently, which offers a very lucrative business opportunity for agencies involved in carrying out remittances.
Mr Kanungo said customers can continue to undertake transactions for purchase of goods and services as per the available balance, but will have to fulfil the KYC requirements before remitting money or reloading the wallet.
As per the laws, a customer can fulfil the KYC requirements by submitting any document like the Aadhaar number and voter ID, among others.