umbrella-entities-for-retail-payments-system

There has been a proposal from RBI that seeks to set up a pan-India New Umbrella Entity (NUE) that will specifically focus on retail payment systems with the conditionality of minimum paid-up capital of the tune of Rs 500 crore.

About the Proposed Entity

Criteria for Application

  • The application should also contain a detailed business plan covering the details of the proposed payment systems and organizational strategy. 
  • Such an entity will be a company incorporated in India under the Companies Act, 2013. 

Criteria for Promoter/Promoter Group

  • There is a provision that calls for the ownership and control of the promoter or the promoter group for the NUE by residents with an experience of 3 years in the realm of the payments ecosystem.
  • While applying for setting up the entity, the promoters need to demonstrate the capital contribution of not less than 10 percent of the paid-up capital, i.e. Rs 50 crore.
  • Five years down the line, the promoter or the promoter group shareholding should undergo a dilution to a minimum of 25 percent. 
  • Maintenance of a minimum net worth of 300 crores at any point in time.
  • There should be a diversified shareholding pattern.
    • Any entity that holds more than 25 percent of the paid-up capital of the NUE will be considered as a Promoter.
  • The norms of corporate governance should be followed by NEU.

The mandate of the Entity

  • Among a host of tasks, it will set up, manage and operate new payment systems that function especially in the retail space.
    • The retail space includes ATMs, white-label PoS, Aadhaar-based payments, and remittance services, although the list is not exhaustive.
  • It is also mandated to develop payment methods, along with standards and technologies.
  • The mandate extends to conducting awareness drives regarding payment systems, operating clearing and settlement systems, identifying and managing relevant risks, etc.

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