The hot new financial payments services, such as mobile wallets and e-wallets, could be completely opened to foreign investors but with stiff riders to safeguard stability of country’s financial markets. Telecom major Bharti and handset maker Nokia and a number of retailers have already launched stored value cards. A user can load cash on these cards that can be used to make various payments, obviating the need to carry large amount of cash. The Reserve Bank of India has already given its conditional nod to the finance ministry’s proposal to allow 100% foreign direct investment (FDI) through the automatic route in these payment services, but experts say the conditions are cumbersome. The department of industrial policy and promotion that administers country's FDI policy will issue the updated regulations though a consolidated policy document called press note by the end of the month. The department will operationalise the policy by creating a separate category of financial services, payment system activities by non-banks, under the list of activities allowed to NBFCs that have FDI, the official said. These services will include prepaid payment instruments, mobile wallet, e-wallet and technology infrastructure for supporting retail payment systems for credit or debit cards and prepaid payment instruments. The agencies offering these services will have to comply with the Payment and Settlement Systems Act, 2007 and also comply with the minimum capitalization norm of $50 million applicable to NBFCs, a condition put forth by the RBI. Experts say allowing FDI in these services through the NBFC route was not prudent as these companies were not purely into non-banking sector. “Semi closed wallets are innovative technology products and are provided as a value added offerings by companies in B2C space like ecommerce, telecom, and retail. Equating them to non-banking financial services will not be prudent,” said Akash Gupt, executive director, PwC. This implies that a number of small retail outlets offering closed wallet service through gift coupons or cash cards valid at multiple outlets will also have to adhere to the minimum capital norm if they want to attract FDI. Gupt says these services do not require huge capital and the RBI guidelines under Payment and settlements act does not mandate it either. But, the central bank is clearing taking no chances in the aftermath of the global financial crisis and is exercising caution on opening up. The RBI has also said that foreign banks with direct or indirect linkages with its Indian subsidiary in NBFC sector should not be allowed to undertake credit card business without physical presence as a bank in India.

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