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.

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