Don't Panic: Money In Your BluSmart Wallet Is Safe

Customers panicking about money stuck in BluSmart Mobility wallet need not worry, as Reserve Bank of India regulations provide certain safety nets that could protect such funds.

On Wednesday, BluSmart halted acceptance of ride bookings in metro cities, after the Securities and Exchange Board of India launched an investigation into alleged financial misconduct by Co-founder Anmol Jaggi.

The probe revealed that Jaggi diverted funds from Gensol Engineering Ltd., a related solar energy company, to purchase a luxury apartment, leading to his ban from the stock market and a forensic investigation into the company.

Some customers have received emails that the balances in their wallet will be refunded in five to seven working days, Times of India reported. However, the company has not made an official announcement yet.

This has left many wallet users concerned about the accessibility of their funds and raised questions about the company's financial stability.

BluSmart wallet customers need not be worried about their funds being stuck, as all wallet businesses in India are generally considered safe, given they are regulated by the Reserve Bank of India.

Earlier, only RBI-authorised entities could offer wallet services such as Paytm Wallet, PhonePe Wallet, Amazon Pay, among others.

On Feb. 23, 2024, the RBI allowed authorised bank and non-bank prepaid payment instrument issuers to issue such services, for making payments across the country for various public transport systems.

Here's what the master guidelines on PPIs say:

1) Full Know Your Customer is mandatory for wallets, to allow users to load higher amounts and use more features, which reduces fraud risks and enhancing transparency.

2) Wallet providers are required to maintain an escrow account with a scheduled commercial bank. Customer funds are kept separately from the company’s own money. This ensures that even if the wallet company fails, users' money is secure.

3) RBI mandates regular compliance audits, reporting of transactions, cybersecurity assessments, and financial disclosures, ensuring systemic oversight.

In the case of Paytm Payments Bank, which had come under RBI scrutiny last year due to supervisory concerns, its wallet services did not suffer as existing customer balances remained safe and users were allowed to withdraw or use funds already in the wallet.

RBI had ensured an orderly transition and had given time to users and merchants to migrate, reducing disruption.

While wallet failures or disruptions can still occur, the RBI’s framework offers a strong safety net.