RBI publishes draft framework for NPCI like new pan India umbrella organization for retail payment systems

RBI publishes draft framework for new pan India umbrella organization for retail payment systems

The central bank has invited comments on the draft framework from all stakeholders by February 25.

At present, National Payments Corporation of India (NPCI) is an umbrella organisation for retail payments systems.

Who Can Set Up The ‘New Umbrella Entity’ -

The RBI, in its draft rules, has suggested that the umbrella entity could be a for-profit or not-for-profit entity, owned and controlled by Indian residents.

1) Proposed umbrella entity can be ‘for profit’ and registered as a company under PSS Act 2007.

2) Entities eligible to apply as promoter / promoter group shall be ‘owned and controlled by residents’.

3) Minimum paid up capital should be Rs 500 crore and a minimum net-worth of Rs 300 crore shall be maintained at all times.

4) Promoters shall upfront demonstrate capital contribution of not less than 10 percent, that is, Rs 50 crore.

5) No single promoter can hold more than 40 percent. Promoter shareholding to be diluted to a minimum of 25 percent after five years.

6) Promoter shareholding to be diluted to a minimum of 25 percent after five years.

Like the NPCI, the new umbrella entity shall set-up, manage and operate new payment systems, especially in the retail space comprising but not limited to automated teller machines, white-label point of sale terminals, Aadhaar-based payments and remittance services. The entity shall also develop new payment methods, standards and technologies, monitor-related issues in the country and internationally, take care of developmental objectives like enhancement of awareness about the payment systems, the RBI proposed.

The banking regulator is seeking comments on the draft guidelines by Feb. 25 after which it will issue the final guidelines and accept applications from those wanting to set up such an organisation.