Yes. As per RBI guidelines, KYC is mandatory for using Wallet services.
With Minimum KYC details, you can Add Money and Spend from Wallet for Merchant Payments.
With Full KYC, you can additionally send/receive money in Wallet and withdraw money from Wallet. Learn More at https://www.freecharge.in/termsandconditions
However, on Freecharge you can Send/Receive Money using UPI, transfer Money to Bank Accounts using UPI. You can also Pay your Bills or recharge your Phones and pay for other services on Freecharge and Freecharge accepting Merchants using Netbanking, Credit/Debit Cards, UPI and Gift Instrument Balance