Source: Zee Business
The Indian central bank has started looking at digital wallets of electric vehicle (EV) platforms after sudden closure of BluSmart, India’s largest all-electric cab service. Suddenly, thousands of users were unable to withdraw the money they had in their wallets, in BluSmart app.
BluSmart ran services in cities like Delhi-NCR and Bengaluru and provided customers with a preloaded digital wallet to book a ride. But as services have been suspended since April , or as customers learned could not be used, transferred,. Or returned back into the freelancers’ wallets. In a subsequent email, the company told customers the refunds may take up to 90 days — thus, raising sweeping questions about what protection is being afforded consumers on any digital platform.
Closed-loop wallets are currently not readily under direct regulation of the central bank, so there may not be enough consumer protection, if the company goes bust — as it did for BluSmart.
RBI may tighten the screws on consumer protection. One possibility is a requirement to maintain customer funds in escrow accounts, which would shield consumer funds even if a company were to shut down. Option Extending the rules that are part of PPIs, as may be relevant, to large closed wallets.
There’s been no conclusion since then, although the RBI might sit down with participants in the next couple of weeks. If new regulations are applied, it could have a significant effect on how digital platforms use or invest user’s money. And other such rules around their financial obligations might be a factor in some cases, especially when considering how, in much of the EV mobility industry, payment systems work on a prepaid basis.
In the wake of BluSmart’s collapse, the financial impropriety popped up in its major investor and financial backer – Gensol Engineering Ltd – which is being probed over charges of misusing funds. A need for better protections was raised, particularly as millions of users use app-based payment systems each day in India’s rapidly growing digital and EV ecosystem.
The regulator has yet to issue an official statement, but any potential decision to tighten oversight of app-specific wallets could significantly impact India’s digital economy, where platforms depend heavily on prepaid balances to enhance user retention and encourage repeat usage.
BluSmart’s collapse was linked to financial irregularities involving its main backer, Gensol Engineering Ltd., which is under investigation for misuse of funds. The incident has highlighted the need for better protections in India’s fast-growing digital and EV industries, where millions of users rely on app-based payment systems every day.
