Published: 19th Apr, 2021
The Reserve Bank of India (RBI) seems to be not in favor of getting direct and supervisory management over the New Umbrella Entities (NUE). However, the central bank seems to be in favor of the National Payments Corporation of India (NPCI) or a newly fashioned physique to take over the function.
Context
The Reserve Bank of India (RBI) seems to be not in favor of getting direct and supervisory management over the New Umbrella Entities (NUE). However, the central bank seems to be in favor of the National Payments Corporation of India (NPCI) or a newly fashioned physique to take over the function.
About
What are New Umbrella Entities (NUEs)?
- New Umbrella Entities shall be non-profit entities.
- It shall be a Company incorporated in India under the Companies Act, 2013, authorized by the Reserve Bank of India (RBI)under Section 4 of the PSS Act, 2007.
- As per the RBI rules, no single promoter can have over 40 percent stake in the NUE. Further, the percent of stake has to be reduced to less than 25 percent within five years of operation.
- Foreign investment is allowed in NUEs as long as they comply with the existing guidelines.
- Entities that are owned and controlled by Indian citizens with at least three years of experience in the payments sector can become promoters of NUEs.
Key-functions
- The pan-India umbrella entity would focus on retail payment systems.
- Furthermore, it will help in setting up and management of a new payment system.
- It will work especially for retail such as ATMs, white-label PoS, Aadhaar-based payments, and remittance services.
- NUEs will develop new payment methods, standards, and technologies for the operation and clearance of settlement systems.
The previous structure
- Earlier, NPCI was working as the umbrella entity for providing retail payments system.
- But due to its task burden, it was decided to set up new umbrella entities for retail payment.
About NPCI
- NPCI is an umbrella organization for retail payments and settlement systems in India.
- It is an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
- It has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013).
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