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After the sudden shutdown of India's largest all-electric taxi service, BlueSmart, the Reserve Bank of India (RBI) has started investigating some digital wallets associated with electric vehicle (EV) companies. According to a Bloomberg report, the move has been taken after complaints from users who are unable to access their money deposited in BlueSmart's closed-loop wallet. This situation is raising questions about the financial security of customers who used these wallets for EV booking, charging services, and other digital transactions.

What is a closed-loop wallet?

A closed-loop wallet is a digital payment system that is limited to a particular platform or service. Money deposited in this type of wallet can be used only on that platform, but cannot be transferred to any other platform or returned to the bank. Paytm Fastag, Amazon Pay Balance, and Metro Card are some examples of such wallets.

How did the BlueSmart controversy start?
The controversy started after allegations of fraud surfaced against BlueSmart. SEBI (Securities and Exchange Board of India) accused the promoters of BlueSmart's parent company, Gensol Engineering, of fraud, after which the company's services were suddenly stopped. As a result, thousands of users were unable to access the money deposited in their wallets.

Why is RBI investigating?

RBI has taken cognizance of the whole matter and has started contacting EV charging point operators and other app-based EV platforms. Its purpose is to evaluate the potential consumer risks that may arise through these closed-loop wallets.

What is the danger?

Safety of money: The amount deposited in the closed-loop wallet cannot be transferred back to the bank account.

Limited use: This amount can be spent only on the respective platform.

Company control: The terms and balance of these wallets are managed by the company itself, which can cause trouble for the users if it is closed.

After this incident, RBI is trying to ensure that the use of digital wallet is safe and transparent, thereby maintaining the financial security of the users.

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