Why do I need to complete Full KYC for my PhonePe Wallet?

As per RBI guidelines, only if you complete your Full KYC verification you will be able to,

• Top up your wallet with upto ₹2,00,000
  Note: Your Wallet balance cannot exceed ₹2,00,000 at any point in time.
  For example, if you have ₹1,80,000 in your PhonePe Wallet, you can only add upto ₹20,000, as the wallet balance cannot exceed ₹2,00,000.
• Withdraw your Wallet balance to any of your linked bank accounts

Important: Full KYC is an optional feature. You can continue using your PhonePe Wallet if you have completed your min-KYC.

Related question(s):
Can I transfer my PhonePe Wallet balance to another PhonePe user after completing Full KYC?

What are the wallet limits for Full KYC?