RBI extends deadline to apply for Umbrella entity on retail payments

34 consortiums working to file intent for NUE

Reserve Bank of India has extended deadline to file application to set up an umbrella entity for retail payments till March 31, 2021. Earlier, it had given time till February 26, 2021.

At least four consortiums, including one led by Tata group and the consortium of Axis Bank, ICICI Bank, Amazon and Visa, are working to plans to form a pan-India entity. State Bank of India is also working on plans to be stakeholder in New Umbrella Entity (NUE). All of them aims to create a for profit NPCI like body for retail payments. At present National Payments Corporation of India (NPCI), a not for profit entity, is sole player managing retail payment systems. RBI has thrown open retail payment systems space for more players to support growth of digital payments.

RBI said in a statement that it had received requests from various stakeholders including Indian Banks’ Association for extending the timeline, keeping in view the Covid-19 related disruptions and inconveniences, banking regulator said.

Bankers said institutions need time to prepare before they apply. The plan and structure for proposed entity should be robust with capacity to take on NPCI. More than competition, it is important to see how system could be made more efficient to tap vast business opportunity. Those with collaboration with IT firms would stand to have advantage.

So Hum Bharat Digital, founded by Naveen Surya, Chairman Emeritus of Payments Council of India (PCI), and Vishwas Patel, Chairman of PCI, backed by Infibeam Avenues are looking to apply for RBI's NUE license. YES Bank was also in talks to pick up a stake in So Hum Bharat. State Bank of India and Bank of Baroda are also in fray to form company for retail payments.

Tata Sons has also promoted a company Ferbine Private Ltd, where private sector lender HDFC Bank and Kotak Mahindra Bank have picked up stakes.

The umbrella entity shall have a minimum paid-up capital of Rs 500 crore. No single promoter/promoter group will have more than 40 per cent investment in the capital of the umbrella entity.

The promoters/promoter groups shall upfront demonstrate capital contribution of not less than 10 per cent (Rs 50 crore) at the time of making an application for setting up of the umbrella entity.

The balance capital shall be secured at the time of commencement of business/operations. A minimum net-worth of Rs 300 crore shall be maintained at all times.