The National Payments Corporation of India (NPCI) is reportedly planning to transform its Bharat Interface for Money (BHIM) app into a standalone subsidiary. This strategic move is aimed at strengthening its position in India’s rapidly expanding digital payments sector. According to recent reports, Lalitha Nataraj, who has a distinguished background with IDFC FIRST Bank and ICICI Bank, has been appointed as the CEO of this new subsidiary.
The decision to establish BHIM as an independent entity is expected to give the app a renewed focus, allowing it to expand its reach and compete more effectively in the payments space. The initiative has received backing from both the government and the Reserve Bank of India (RBI), signalling a broader intent to foster the app’s growth and market presence.
This move by NPCI is seen as a strategic response to the concentration of market power within India’s Unified Payments Interface (UPI) ecosystem. Currently, Walmart-backed PhonePe and Google Pay dominate the market, processing around 85 per cent of UPI transactions. In stark contrast, BHIM’s market share is minimal, handling only 22.72 million transactions in June, which accounts for just 0.16 per cent of the total UPI volumes.
The idea behind this spin-off is to reduce the dependence on American companies dominating the Indian payments market. By elevating BHIM’s status as a separate entity, NPCI is looking to bolster its brand and provide a stronger alternative in the digital payments landscape.
Launched by Prime Minister Narendra Modi in 2016, the BHIM app has been pivotal in promoting digital transactions across India. However, with the upcoming changes, the app is expected to undergo a significant revamp. While the new subsidiary will continue to operate under the NPCI umbrella, its operational structure may see adjustments. Once BHIM is established as a separate company, it will have its own financial reporting, balance sheets, and cost structure, distinguishing it from the rest of NPCI’s operations.
This is not the first time NPCI has spun off a segment of its operations. In 2021, the corporation created NPCI Bharat BillPay Limited, a separate subsidiary to manage the Bharat Bill Payment System, marking a similar strategic shift.
As NPCI continues to evolve and adapt to the changing dynamics of the digital payments ecosystem, the establishment of BHIM as an independent subsidiary could pave the way for more competitive and diversified offerings in India’s UPI market.
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