The Reserve Bank of India has framed new set of guidelines for the New Umbrella Entity (NUE) on retail payments designed on the lines of National Payments Corporation of India (NPCI). It suggests that any the New Umbrella Entity (NUE) formed for retail payments must have a minimum paid-up capital of Rs 500 crore and strive for inter-operability with NPCI systems, said the Reserve Bank of India.
These NPCI like organisations are likely to compete with NPCI, which was set-up by by the RBI and the Indian Banks’ Association (IBA) in 2008. In February, the RBI had released draft guidelines for such organizations, looking to reduce concentration risks in the space dominated by NPCI.
NPCI was developed as a not-for-profit company under the provisions of the Companies Act to offer infrastructure to the entire banking system in India.
In its “framework for authorisation of pan-India umbrella entity for retail payments”, the central bank said that no single promoter or promoter group are not allowed to initiate over 40 percent investment in the capital of this entity. It further stated that the promoter “can” slash its shareholding in the entity to a minimum of 25 percent after five years.
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The apex bank had called for suggestions for formulating New Umbrella Entity (NUE) in February 2020. It was proposed in a bid to avoid any discrepancy with a single entity at place, as NPCI handles a range of popular platforms namely UPI, AePS, BBPS, RuPay.