The Reserve Bank of India (RBI) is reviewing several digital wallets linked to electric vehicle (EV) companies following the unexpected collapse of BluSmart, the country’s largest all-EV taxi service. The sudden shutdown left users unable to access funds stored in the app’s e-wallet, prompting concerns about the lack of safeguards for consumers who load money into so-called closed-loop wallets.
According to sources familiar with the situation, the central bank has initiated informal consultations with EV charging-point operators and other app-based EV platforms to evaluate potential consumer risks. This scrutiny follows allegations of fraud against BluSmart, which highlighted vulnerabilities in India’s fast-growing digital services ecosystem.
Closed-loop wallets, widely used within the EV sector for services such as ride booking and charging, function solely within a single platform. Unlike open-system wallets regulated by the RBI, these digital wallets lack direct central bank oversight, making them particularly susceptible if the platform fails.
Following the BluSmart shutdown, thousands of users who had preloaded cash into the wallet for airport and intra-city rides found themselves unable to obtain refunds or transfer their funds. The company informed customers that it could take up to 90 days to process refunds.
The RBI is now considering proposing escrow arrangements for consumer balances in app-specific wallets, similar to those required of payment aggregators, to safeguard funds if a company ceases operations. Another option on the table is extending elements of the Prepaid Payment Instruments (PPI) guidelines to large-scale closed wallets.
While the RBI has not yet taken a formal stance, any move to increase oversight could significantly impact India’s digital economy. Many platforms rely heavily on prepaid balances to build consumer loyalty and encourage repeat transactions.
Sources indicated that the central bank may also hold a meeting with stakeholders in the coming weeks to discuss potential measures. An official response from the RBI is still pending.
-Bloomberg
