Online Gaming Regulations: MeitY Likely To Give Nod To A Graded KYC Approach

Amidst its efforts to regulate the online gaming space in the country, the Ministry of Electronics and Information Technology (MeitY) is reportedly expected to accept the demand of the gaming platforms to allow a graded approach for know your customer (KYC).

A number of gaming platforms have demanded that users be allowed to register using a one-time password and a self-declaration of name and identification number of any ‘mandatory document’ for small deposits of up to INR 10,000, Business Standard reported.

According to ‘Draft Amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021’, released last month, online gaming intermediaries are required to identify the users and verify their identity at the time of registration of a new account for online gaming.

For a full KYC, gaming platforms will need to develop mechanisms such as a video-based customer identification process. Hence, many platforms have demanded a relaxation from this requirement for small deposit amounts, the report said.

The companies have suggested that the ministry follow KYC procedures along the lines of the Reserve Bank of India’s (RBI’s) master directions for small prepaid payment instruments (PPIs), and MeitY is likely to approve this demand.

For PPIs up to INR 10,000, users can register with a mobile number verified with a one-time password (OTP) and self-declaration of name and unique identity/ identification number of documents such as passport, driving licence, voter’s identity card, among others.

“The KYC requirement will be the same as prescribed by the RBI. We don’t want to create any additional requirement for KYC,” a senior official was quoted as saying in the report.

MeitY came out with the draft amendments to the IT Rules days after the Centre appointed it as the nodal ministry to oversee the online gaming industry. The ministry has proposed a self-regulatory mechanism for online gaming companies.

The ministry has conducted multiple rounds of consultations with stakeholders on the draft amendments, and has received a “decent amount of feedback” from companies, law firms, industry bodies, and civil society organisations, as per the report.

The online gaming industry has grown rapidly in the country over the last few years and has produced unicorns like Dream11, MPL, and Games24X7.

According to a report by gaming and interactive media-focused VC fund Lumikai, the number of gamers in the country rose 12% to 507 Mn by March 2022 (24% were paying users) from 450 Mn in March 2021.