New Umbrella Entity : The NPCI Rival

First understand  What the NUE is?

As per Draft framework released by RBI , NUE (New Umbrella Entity) for retail payment system is a company incorporated under companies act and authorised by RBI under Payment and Settlement Act.

Why NUE?

As of now, the government-owned National Payments Corporation of India (NPCI) is the sole umbrella body to facilitate retail payments which owns and operates the UPI Interface, the RuPay network etc. for settlement. But, the RBI feel that NPCI alone won’t be able to carry out all the volume of transactions in the retail segment and Government also feel that monopoly in this sector can be harmful. So, NUE  will offer competition to NPCI and offer similar product like UPI and other payment modes.



Steps taken by RBI for NUE 

The central bank Reserve Bank of India had released the framework for the authorisation of NUEs on August 18, 2020. Since then, many Private players in the Indian banking and payments landscape have formed consortium for planning different business structure, technology and security. The Last date for application for NUE was 26-feb-2021, which is now extended till 31-Mar-2021.

Eligibility Criteria set by RBI

The entity eligible to apply as promoter / promoter group for the NUE shall be ‘owned and controlled by residents’ with 3 years’ experience in the payments ecosystem. Any entity holding more than 25% of the paid-up capital of the NUE shall be deemed to be a Promoter. The NUE shall have a minimum paid-up capital of Rs.500 crore (to support / address the need of capital for managing risks, invest in technological infrastructure, for business operations, etc.). No single promoter / promoter group shall have more than 40% investment in the capital of the NUE.

NUE : Scope of Activity

1. Set-up, manage and operate new payment system(s) especially in the retail space and 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.
2. Operate clearing and settlement systems; identify and manage relevant risks such as settlement, credit, liquidity and operational and preserve the integrity of the system(s);monitor retail payment system developments and related issues in the country and internationally to avoid shocks, frauds and contagions that may adversely affect the system(s) and / or the economy in general.

List of Applications received by RBI so far :

1. Amazon - The consortium  includes Axis Bank, ICICI Bank, Visa and also includes Indian merchant payments unicorn Pine Labs and Indian online payment gateway Billdesk.

2. Paytm & Ola - Both Indian unicorns also joined hands with Indusland Bank and Non-bank lender Centrum Finance, Zeta Pay and Electronic Payment and Services (EPS), are also expected to be part of the group.

3. Tata Group - Tata group along with its subsidiary Ferbine Pvt. Ltd. is expected  to hold the majority  stake in NUE. This consortium  also includes Airtel Digital, HDFC Bank, Kotak Mahindra  Bank for 10% each and Mastercard and Nasper-backed PayU are also part of the consortium.

4. So Hum Bharat - A company promoted by payment industry veteran Mr. Naveen Surya and Chairman of PCI(Payment Corporation of India) Vishwas Patel, So Hum Bharat Digital Payment  System also apply for the NUE License. So Hum Bharat is is a wholly-owned subsidiary of the BSE-listed financial technology company Infibeam Avenues, where Vishwas Patel is also executive director of Infibeam Avenues. As per ET, Jio Payment, Google and Facebook  also pick up stake in So Hum Bharat. In December last year, it was reported that Yes Bank was in talks with So Hum Bharat to pick up a 9.99% stake in the company. 







NUEs are not only competitors of NPCI, but also helps to innovate India's Retail Payment System. The whole system also work with interoperability and increase the adoption of cashless payment system. 

Blog by Nimish Maheshwari 

Open Dmat account with us :
 

Note : No content of this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is for educational and informational use only. The Author accepts no liability for any interpretation of article or comments on this blog being used for actual investment. This is purely an information services, and any trading done on the basis of this information is at your own, sole risk.


Comments

Post a Comment

Popular posts from this blog

How IT Companies like TCS is saving crores in taxes by Buyback rather than paying dividends ?

There are too many companies doing buybacks(like TCS, Wipro etc.), Do you know why they do buyback ? Today, we are going to answer this big question. To understand the whole story, lets understand What is Buyback? In simple terms, Buyback of share means Re-acquisition by the company of its own share and return money to the shareholder. Now why does the company do that? – to reward shareholders. In India, most of IT companies are promoter managed (but their is no doubt on their corporate governance) and used to fund their other ventures. A. TCS (Owned  by Tatas, to fund their ventures ranging from salt to steel) B. Tech Mahindra (Owned by Mahindras, to fund their ventures ranging from automobile to hospitality) C. Wipro (owned by Azim Premji , to fund their CSR Arm and startup / investment arms Premji Invest ) How  does buyback create wealth for Shareholders? – A buyback benefits shareholders by increasing the percentage of ownership held by each shareholder by reducing the to...
Read more

Tesla & Bitcoin : The Bad part of Good Story

Image
 What happened? Tesla announced their investment of $1.5 Billion in Bitcoin along with that co. also intends to accept biggest crypto currency as a form of payment for their products and services. Bitcoin so received against product and services may or may not liquidate . So Tesla became  first non-fintech Fortune 100 company to load up on bitcoin   Here is the snapshot of this mega news from Tesla's annual report  Source:  Tesla Annual Report The Reactions from all over the world: 1.B itcoin price jumped to an all-time high of above $48,00 0 on Tuesday morning as investors rushed into the asset after  Elon Musk 's Tesla said it had bought up $1.5 billion of the cryptocurrency. The news led to surge in Tesla's Bitcoin investment by $561 million (37% gain). 2.  Other major cryptocurrencies, such as ethereum, tether and ripple, were also trading up to 3% in the green 3.  "You're going to see every company in America do the same thing [as Tesla]," No...
Read more

Revenge Tourism In India And Revival Of Tourism Stocks

Image
We can’t really call it post-COVID travel yet, so we will stick to travel during COVID times for now. In this regard, Indians are doing a great job, and we are hopeful that it is done with the seriousness of the times. Lately, a new trend has surfaced among Indian travellers that is being called  Revenge Travel . Travellers have not been able to strike their bucket lists in the last three months, which surely has created a strong urge for tourism. Also, hotels, resorts, car rental companies, tourism boards and every stakeholders involved in tourism have clearly understood that the future game plan will be only to majorly focus on safety, physical distancing and visible hygiene, and are working to come up with very advanced level of cleanliness and contactless services. With these new protocols and SOPs in place, the major requirement of the day is to instill confidence in the minds of travellers. As per a report by McKinsey & Company , titled ‘The way back: What the world can l...
Read more