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The total shareholder entities for NPCI now stands at 67. ( iStockphoto)
The total shareholder entities for NPCI now stands at 67. ( iStockphoto)

NPCI allows payment banks and fintechs to be shareholders

  • NPCI had made an offer for the private placement to 131 RBI regulated entities, of which 19 showed interest and were allotted shares in NPCI
  • Last month, UPI-payments in the country crossed the 2 billion transaction count

Retail payments body National Payments Corporation of India (NPCI) on Thursday said that it has completed private placement of 4.63% of its equity shares worth 81.64 crores, allowing small finance and payment banks, as well as fintechs to be shareholders in the organisation.

NPCI had made an offer for the private placement to 131 Reserve Bank of India (RBI) regulated entities, of which 19 showed interest and were allotted shares in NPCI.

With this small finance and payment banks such as AU Small Finance Bank Ltd., India Post Payments Bank Ltd., and digital payment fintechs including BillDesk, Amazon Pay, PayU India, PhonePe, Pine Labs and MobiKwik have joined NPCI’s shareholding and hold up to 0.44% each in the retail payments entity.

The total shareholder entities for NPCI now stands at 67.

According to NPCI, this broad-basing exercise was done to further diversify and distribute the NPCI shareholding to a larger set of the RBI regulated entities and categories of payment industry participants.

Earlier the RBI had instructed NPCI to broad-base its shareholdings to represent a larger segment of participants. In addition to this, the Watal Committee had also recommended this expansion in shareholding for NPCI, in December 2016.

Senior payment executives, directly aware of the discussions, also said that this further privatisation will lure new-age entities to become participants, as NPCI expects to face competition from RBI’s recently approved New Umbrella Entity (NUE), in the future.

The NUE umbrella entities are expected to operate pan-India retail payments systems, and bring innovation to India’s growing digital payments landscape.

“We are extremely pleased with the outcome of this exercise and the confidence expressed in NPCI’s continued growth and larger purpose. With this we have also broad based our shareholding to include new categories like payment banks, small finance banks and payment system operators in addition to existing public sector, private sector, foreign, co-operative and regional rural banks" said Rupesh H Acharya, Chief of Finance, NPCI.

Apart from new-age entities, NPCI has also added Standard Chartered Bank Ltd., Dhanlaxmi Bank Ltd. and IDFC First Bank Ltd. as its shareholders.

Currently, government-owned banks such as State Bank of India, Union Bank of India, Bank of Baroda, Punjab National Bank and Canara Bank own more than 40% stake in NPCI’s shareholding.

In spite of this diversification, the top 10 shareholders which also include private banks such as HDFC Bank, Axis Bank, ICICI Bank and HSBC own almost 77% in NPCI’s shareholding.

NPCI is a not-for-profit organisation, and an initiative of the RBI and Indian Banks’ Association (IBA). The company currently operates various payment infrastructure including - Unified Payments Interface (UPI), Aadhaar Enabled Payment System (AePS), Bharat BillPay, amongst others.

Last month, UPI-payments in the country crossed the 2 billion transaction count.

Despite the milestone, NPCI chief executive said that there is still vast room for growth, as more use cases await approval. Asbe added that UPI payments can touch a billion over the next two to three years as new use cases emerge.

In August, NPCI launched its international arm-- NPCI International Payments Ltd -- to expand real-time payment system UPI and card payment network RuPay in other countries.

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