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RBI's mobile wallet restrictions: What it means for fintechs, users
25 May 2026

The Reserve Bank of India (RBI) has surprised the fintech industry by tightening guidelines for prepaid payment instruments (PPIs), popularly known as mobile wallets.

The new rules, which affect major players like Mobikwik, PhonePe, Amazon Pay, Pine Labs, and Airtel Payments Bank, among others, impose a ₹2 lakh monthly outstanding balance limit in a wallet.

There is also a ₹25,000 limit for person-to-person (P2P) transfers and a ₹10,000 monthly cash loading balance, among other restrictions.

PCC round table discussion highlights concerns
Industry reaction

The Policy Consensus Centre, an industry think tank, has criticized the new limits. They argue that these restrictions appear to favor some players in the ecosystem while disadvantaging others.

The think tank recently held a round table discussion with fintech associations, mobile wallets, fintech consultants, and former bankers to discuss the RBI's decision.

Some participants expressed concerns that policymakers may be trying to downplay the strategic role of wallets in favor of banking systems and Unified Payments Interface (UPI).

Concerns over misuse of digital wallets
Regulatory worries

The RBI's decision is largely driven by concerns over the misuse of digital wallets by betting, gambling, and real-money gaming firms.

These activities are banned but continue to persist. Merchants often misidentify or miscategorize themselves to facilitate such transactions.

A payment gateway firm's founder and CEO said that "the instrument was initially meant to get the unbanked to use digital payments."

Financial Intelligence Unit flags suspicious transactions
Transaction scrutiny

The Financial Intelligence Unit (FIU) of the finance ministry has flagged suspicious transactions for further investigation.

These include transaction frequency, income-to-value mismatches, and sudden account inactivity after high-value transfers.

While no cases have been filed yet, this highlights the RBI's concerns over potential misuse of digital wallets for illegal activities.

Mobile wallet firms express concerns
Industry impact

Executives from several mobile wallet firms have expressed their concerns over the new restrictions.

They argue that if the RBI has data on suspicious transactions, it should share it with the industry or make it public.

One CEO told Moneycontrol, "Putting restrictions on the entire industry is unfortunate and unhelpful."

Another CEO warned that these rules could hurt profitability and deter payment firms from investing in financial inclusion niche products.

Calls for principle-based regulation instead of prescriptive approach
Financial implications

The new guidelines could make prepaid instruments (PPIs) more difficult and expensive to operate, leading to higher customer drop-offs.

Participants at the May 20 meeting stressed that economics of wallets are different from those of banking or UPI ecosystems.

PCC CEO Nirupama Soundararajan said, "Instead of laying down limits for the industry, the regulator and industry should target the risk and the governance practices. Eventually, regulation should kind of evolve to be a principle-based regulation rather than a prescriptive base."