Description
With the formulation of draft guidelines/framework for allowing entry of private players as Umbrella Entities, the proprietary of National Payment Corporation of India (NPCI), founded in 2008, appears to be getting over when NUEs get RBI approval. NPCI functions as an umbrella organisation for all kinds of retail payment systems in India, which include variety of products, delivery channels, service providers and technology solutions. The product basket majorly consists of Aadhar enabled Payment System (AePS), Bharat Bill Payment System (BBPS), Bharat Interface for Money (BHIM), Cheque Truncation System (CTS), Immediate Payment System (IMPS), National Automated Clearing House (NACH), National Financial Switch (NFS), Rupee Payment (RuPay), and Unified Payment Interface (UPI). Opening up of payment space to private players would lead to development of new payment methods, operational efficiency, competition, reasonable pricing, risk mitigation, adoption of new technology, and developing seamless settlement system.
Entry Barriers
The new entities will be Companies incorporated in India under Companies Act, 2013. These could be commercial entities or registered under section 8 of Companies Act. These private entities shall be authorized by RBI under section 4 of Payment and Settlement Act, 2007. The private players eligible to apply as promoter or promoter group for NUE shall have ownership of residents with minimum 3 years of experience as Payment System Operator (PSO)/Payment Service Provider (PSP)/Technology Service Provider (TSP). Any entity having more than 25% of paid up capital of the NUE shall be construed as a promoter. The Memorandum of Association (MoA) of the entity must include operating a pan-India NUE in retail payment space. FDI/FPI would be permissible under extant guidelines of Government of India. These entities/promoter/promoter group shall meet the Fit and Proper criteria of RBI. RBI retains the right to approve appointment of Director on the NUE board besides nominating its member.
Capital Requirement
RBI has kept the minimum paid up capital requirement of Rs 500 crore for managing risks, business operations and investment in technological infrastructure. This capital requirement is at par with the Universal banks whereas Payment banks have a requirement of Rs 100 crore and the Small Finance bank is Rs 200 crore. No single promoter or promoter group will have more than 40% of the initial capital, which has to be brought down to minimum of 25% post 5 years of commencement of business. A minimum net-worth of Rs 300 crore shall be maintained at all times. While making NUE application, promoter(s) shall demonstrate a minimum capital contribution of 10% i.e. Rs 50 crore.
Scope of Work
NUE shall have scope of activities of setting up, managing and operating new payment system especially in retail space apart from developing new payment methods; operate clearing and settlement system besides managing risks associated; fulfill its policy objectives; and strengthen retail payment ecosystem in the country.
Applications for setting up NUE will contain a detailed business plan, covering technology, security features, market analysis, benefits of payment system, operational structure, time frame and scale of operations, etc. The business plan should also incorporate organisational strategy of fulfilling objectives of umbrella entity. RBI would take six months to process these applications post deadline for submission.
Please keep watching this space for interesting updates in retail payment space!
Kommentare