Umbrella entity for retail payment systems: RBI unveils framework


Reserve Bank of India released a framework for setting up a new umbrella entity for retail payment systems in India. The responsibility of the new entity is to ensure the payments are exchanged efficiently and safely by framing necessary rules and related processes. The entity focusing on the retail payments in India incorporated under the Companies Act, 2013.

It will monitor the retail payment system including retail payment space such as ATMs, white-label PoS, Aadhar-based payment, and remittance services. The operation of clearing and settlement systems for participating banks and non-banks, identify and manage relevant risks will be other functions of this entity. It is permitted to participate in the central bank’s payment and settlement system as well. The formation of the umbrella entity has been authorized under the Payment and Systems Act, 2007 and shall be governed according to the provisions under the PSS Act,2007, and other relevant guidelines and instructions.

Currently National Payment Corporation of India performing the role. But the competition in the retail payment ecosystem also has increased and NPCI has gotten stuck with UPI and they have very little to offer now. So, RBI decided to set up a Pan India body to monitor the retail payment system in India. The call for new entities to set up an NUE is in line with a January 2019 policy paper by the RBI. The formation of Pan India Umbrella Academy will replace NCPI from the retail payment system and will ensure the smoothness and safety of payments.

Residents those who have three years of experience in the payment ecosystem as payment system operator or payment service provider are eligible to apply as promotor or promotor group. The shareholding pattern shall be diversified. Any entity having more than 25% of the paid-up capital of the NUE shall be deemed to be a promoter. For managing risks and investing in technological infrastructure and business operations, the NUE shall have a minimum paid-up capital of 500 crores. A promotor group or a single promotor shall have only less than 40% investment in the capital of NUE.


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