Highlights

Indian central bank RBI released Framework for Authorisation of Pan-India Umbrella Entity for retail payments.

Key Features

  • The Reserve Bank of India will set up a new pan-India umbrella entity with a minimum paid-up capital of Rs 500 crores (Rs 5 Billions).
  • The entity will set up, operate, manage new payment systems that comprises of Automated Teller Machine, Aadhaar based payments, label Point of Sales, remittance services. Also, it will develop standards, payment methods and technologies related issues.
  • The authorisation is to be issued by the Board for Regulation and Supervision of Payment and Settlement Systems. The directors of the board are to be appointed by the Apex bank.

Backthrow

The entities are to be incorporated under Companies Act, 2013. Also, the entities are to be authorised under Section 4 of Payment and Settlement Systems act, 2007.

Highlights of the entity

  • The entities are eligible to apply as promoters of the new umbrella entity provided they are owned and controlled by resident Indian citizens under the Foreign Exchange Management Act, 1999.
  • An entity holding paid up capital between 25 per cent and 40 per cent of umbrella entity will be deemed to be a promoter.
  • The promoter should make payment in advance, that is, 10 per cent of minimum capital.
  • The shareholding of the promoter shall be diluted to a minimum of 25 per cent after five years of business.
  • A minimum net worth of Rs 300 crores (Rs 3 Billions) is to be maintained at all times.

The FDI should fulfil the capital requirement under the rules framed under Foreign Exchange Management Act 1999.

The framework for the umbrella entity is being launched to split the accumulated powers and responsibilities of NPCI. The National Payment Corporation of India is the hub of all electronic retail payments in India. It was founded in 2008 under Section 8 of the Companies Act, 2013 and was established by RBI.

The NPCI provides following services

  • Aadhaar Enabled Payment System (AEPS)
  • Bharat Bill Payment System (BBPS)
  • BharatQR
  • BHIM Aadhaar Pay (BAP)
  • Cheque Truncation System (CTS)
  • Immediate Payment Service (IMPS)
  • National Automated Clearing House (NACH)
  • National Electronic Toll Collection (NETC)
  • National Financial Switches (NFS)
  • RuPay
  • National Common Mobility Card (NCMC)
  • National Automated Clearing House (NACH)
  • Unified Payment Interface (UPI)

RBI Framework for Authorisation of Pan India