NEW UMBRELLA ENTITY - A GAME CHANGER

NUEs will be a non-profit entity that will set-up, manage and operate new payment systems, especially in the retail space such as ATMs, whitelabel PoS; Aadhaar-based payments and remittance services.

- Gijo Verghese

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Gijo Verghese Senior Manager(Faculty) Union Bank of India

The Reserve Bank of India had invited applications to set up the NUE in August last year, setting February 26, 2021, as the last date for applications. RBI guidelines mandate that applicants have at least three years of experience in the payments space, and a minimum paid-up capital of Rs 500 crore to be eligible to apply. The new umbrella entity will be entitled to set up, manage and operate new payment systems in the retail space including ATMs, PoS, Aadhaarbased payments and remittance services. The NUE is expected to develop systems that will be able to interact and be interoperable to the extent possible with the existing systems operated by NPCI.

Unlike NPCI, the NUE can be a for-profit entity. No single promoter is allowed to have more than 40 percent investment in the capital of the NUE, as per RBI guidelines. The promoter shareholding can be diluted to a minimum of 25 percent after five years of the commencement of business of the umbrella entity. The NUE would be required to maintain a net-worth of Rs 300 crore at all times.

Digital transactions have doubled in the last two years, faster than any major country outside China. Reports suggest India's digital transactions may reach $2 trillion by 2023, presenting a huge opportunity for players.

Currently, all digital transactions are processed by the National Payments Corporation of India, a non-profit, umbrella organisation backed by 54 banks.