Home/ Industry / Banking/  RBI proposes draft rules to set up alternative retail payments system

Mumbai: The Reserve bank of India on Tuesday proposed a draft framework for setting up a new umbrella entity (NUE) focussed on retail payments system, along the lines of National Payments Corporation of India (NPCI).

The new entity will be a company incorporated in India under the Companies Act, 2013, with a minimum paid-up capital of 500 crore and no single promoter/promoter group holding more than 40% investment in the capital.

“The promoters shall upfront demonstrate capital contribution of not less than 10% i.e. 50 crore at the time of making an application for setting up of the NUE. The promoter/promoter group shareholding shall be diluted to a minimum of 25% after 5 years of the commencement of business of the NUE," RBI said.

A minimum net-worth of 300 crore shall be maintained at all times, it said.

The proposed umbrella body will set up, manage and operate new payments system, especially in the retail space, comprising of but not limited to ATMs, White Label PoS, Aadhaar-based payments and remittance services. It will develop new payment methods, standards and technologies and also operate clearing and settlement systems.

The NUE will also be responsible for monitoring retail payments system developments and related issues in the country and internationally to avoid shocks, frauds and contagions that may adversely affect the system.

The entity will be have to fulfill the norms of corporate governance along with ‘fit and proper’ criteria for persons to be appointed to its board. The RBI will have the right to approve the appointment of directors and also nominate a member to the board.

Prior to 2008, the RBI managed, developed and operated various payment systems. It set up the National Electronic Funds Transfer System and Electronic Clearing Service. But as electronic transactions gained traction, RBI found it necessary to set up the NPCI to monitor these retail payments.

Gopika Gopakumar
Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Updated: 11 Feb 2020, 01:56 PM IST
Recommended For You
Get alerts on WhatsApp
Set Preferences My Reads Watchlist Feedback Redeem a Gift Card Logout