Home / News / India /  RBI extends application deadline umbrella entity for retail payments

MUMBAI: The Reserve Bank of India (RBI) on Friday extended the deadline for submitting applications for setting up a pan-India umbrella entity for retail payments to 31 March. The earlier deadline was for today.

"Requests have been received from various stakeholders including Indian Banks’ Association for extending the timeline, keeping in view the COVID-19 related disruptions and inconveniences. It has accordingly decided to extend the timeline for making the application up to March 31, 2021," the central bank said in a press release.

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Last year, the RBI had released the framework for setting up a New Umbrella Entity (NUE) for various payment services. At present, only the National Payments Council of India (NPCI), incorporated as a not-for-profit entity, supports various payment systems, including RuPay, UPI and National Automated Clearing House, which manage inter-bank transfers.

The RBI's move is aimed at developing a network parallel to NPCI, which can maintain interoperability with services such as UPI and yet foster innovation and inclusion in the payments space.

Consortiums of top corporates, banks, fintech companies are eyeing the licence to set up the umbrella entity which will rival government-owned NPCI.

State Bank of India, ICICI Bank, HDFC Bank, Bank of Baroda, Axis Bank, Kotak Mahindra Bank and Yes Bank are looking to apply for the licence. Global firms such as Amazon and fintech companies like SoHum, PayTM are also expected to join the race.

On Thursday, HDFC Bank and Kotak Mahindra Bank informed the stock exchanges that they have picked up a 9.99% stake each in Tata Group promoted Ferbine Private Ltd. Ferbine was incorporated on 18 January 2021 to make apply to RBI for the licence, the exchange notice said.

“The main business of the company would be to operating a pan-India umbrella entity for retail payment systems, as would be allowed/licensed by RBI, subject to approval of the PUE application," it said.

Economic Times had reported that the finance ministry is set to allow SBI, Bank of Baroda to apply for the NUE licence as it would result in common ownership between NPCI and the NUE.

NPCI is a not-for-profit organisation, and an initiative of the RBI and Indian Banks’ Association (IBA). SBI, HDFC Bank and Bank of Baroda own a total 24.2% stake in NPCI. The three process more than 50% of all digital transactions - those made by their own customers and also third-party networks such as UPI.

In August last year, the RBI had unveiled the framework for setting up the umbrella entity. As per the guidelines, companies with at least three years’ experience and a net worth of over Rs500 crore will be eligible to set up the umbrella entity which among other things will be permitted to set up, manage and operate new payment systems in the retail space comprising ATMs, White Label PoS, Aadhaar-based payments and remittance services.

Unlike NPCI, the NUE can be a for-profit entity. No single promoter is allowed to have more than 40% investment in the capital of the NUE, as per RBI guidelines. The promoter shareholding can be diluted to a minimum of 25% after five years of the commencement of business of the umbrella entity. The NUE would also have to maintain a minimum net-worth of Rs300 crore at all times.

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