NPCI to level up UPI play with BHIM spin-off; appoints Nataraj CEO of arm

Lalitha Nataraj previously worked with IDFC FIRST Bank and ICICI Bank

Retail payments regulator National Payments Corporation of India (NPCI) is in the process of spinning off Bharat Interface for Money (BHIM) into a subsidiary as the home-grown payments application looks to expand its presence in the country, industry sources said.

The NPCI has appointed Lalitha Nataraj the chief executive officer (CEO) of the new subsidiary, the sources added. Nataraj previously worked with IDFC FIRST Bank and ICICI Bank.
 

“BHIM will become a separate entity. There will be more focus on growing it as a payments application. Both the government and the Reserve Bank of India are keen on expanding the app,” said the source aware of the development.
 

The NPCI did not respond to queries from Business Standard till the time of going to press.
 

The decision to float a new subsidiary under the NPCI brand comes as the payments organisation seeks to address the 

challenge of concentration risk in the country’s Unified Payments Interface (UPI) market.  
 

“The idea is to reduce reliance on two American companies — Walmart-backed PhonePe and Google —in India’s payments ecosystem. If others aren’t doing it, why not push the NPCI’s own internal brand?” said another source requesting anonymity.

Currently, PhonePe and Google Pay together process around 85 per cent of UPI volumes in India, raising concerns about a duopoly in the industry.
 

In June, PhonePe and Google Pay processed 6.7 billion and 5.1 billion transactions, respectively. In comparison, the BHIM app handled just 22.72 million UPI transactions, which is just 0.16 per cent share of the payment volumes. 
 

Sources also said the BHIM application was undergoing a revamp.
 

The new subsidiary will continue to operate under the NPCI brand, and there would not be an operational change with the application. However, there might be some changes, said one of the people quoted above. “Currently, all turnover is reported within NPCI. When a separate company comes into place, it has its own balance sheets, cost structure, among others. In its current form, BHIM is NPCI itself,” the source said.
 

Developed by the NPCI, BHIM was launched by Prime Minister Narendra Modi in 2016. The app allows users to make direct bank payments and request money from anyone who is on UPI.  
 

This is not the first time the NPCI has decided to transfer its business to a new subsidiary. 
 

In 2021, it transferred Bharat Bill Payment System transaction mandates to a new subsidiary called NPCI Bharat BillPay Limited, hiving off its automated bill payment business from the umbrella body.
 

NBBL is a wholly owned subsidiary of NPCI. The same year, NPCI appointed former PayU and Airtel Payments Bank executive Noopur Chaturvedi as the CEO of NBBL.