NPCI likely to get licence by early September: IBA official

The IBA-promoted National Payments Corporation of India (NPCI), a new body to facilitate retail clearing operations, is likely to soon get the Reserve Bank nod to commence operations, a senior banking industry official said.

"We expect to get the licence for the new entity this month or early next month," the Indian Banks Association Deputy Chief Executive K Unnikrishnan told PTI here.

The NPCI is the new entity being set up by the IBA for the gradual segregation of retail payments and settlements from the country's apex bank, the Reserve Bank of India (RBI), to a separate company.
  The Reserve Bank had first mentioned about the creation of an umbrella organisation for retail payment activities in its 2006-07 vision document to segregate payment activities including clearing operations, to the new company.

 

The Indian Banks Association (IBA) is acting as a facilitator for setting up the entity.

NPCI, which would be incorporated in the form of a Section 25 company, is expected to carry out all retail transactions except Real Time Gross Settlement (RTGS) systems over a period of time.

Parliament had recently cleared the Payment and Settlements Act, 2007, which is expected to give more power to the central bank in matters related to payment and settlement more effectively by introducing uniformity and standardisation in retail transactions.

Presently, the Reserve Bank is burdened with all types of payment clearing activities.

"The creation of a separate company such as the NPCI would help to significantly reduce this operational burden," Unnikrishnan said.