The decision comes in the wake of RBI receiving requests from stakeholders, including Indian Banks’ Association (IBA), to extend the deadline, which was to expire on Friday
The Reserve Bank of India (RBI) has extended the deadline for submitting applications for setting up a pan-India umbrella entity for retail payments to 31 March. The decision comes in the wake of RBI receiving requests from stakeholders, including Indian Banks’ Association (IBA), to extend the deadline, which was to expire on Friday.
“Requests have been received from various stakeholders, including the IBA, for extending the timeline, keeping in view the covid-19 related disruptions and inconveniences. It has accordingly decided to extend the timeline for making the application up to 31 March 2021," the central bank said.
Last year, RBI released the framework for setting up a New Umbrella Entity (NUE) for various payment services. At present, only the National Payments Council of India (NPCI), which is incorporated as a not-for-profit entity, performs the role of supporting payment systems, including RuPay, the Unified Payments Interface (UPI), and National Automated Clearing House, which manage inter-bank transfers. RBI’s move is aimed at developing a network parallel to NPCI, which can maintain interoperability with services such as UPI and yet foster innovation and inclusion in the payments space.
Consortiums of top corporates, banks and fintech companies are eyeing licences to set up an NUE, which will rival state-owned NPCI. Banks, including State Bank of India (SBI), ICICI Bank, HDFC Bank, Bank of Baroda, Axis Bank, Kotak Mahindra Bank and Yes Bank aim to participate in the NUE. Global companies such as Amazon and other fintech companies such as SoHum and Paytm are expected to join the race separately as part of a consortium.
On Thursday, HDFC Bank and Kotak Mahindra informed the stock exchanges that they have picked up a 9.99% stake each in Tata group-promoted Ferbine Pvt. Ltd, incorporated on 18 January to apply for an NUE licence. “The main business of the company would be to operate a pan-India umbrella entity for retail payment systems, as would be allowed/licensed by RBI, subject to approval of the NUE application," it said.
Separately, The Economic Times had reported that the finance ministry is set to give approval to SBI and Bank of Baroda to apply for the NUE licence as it would result in common ownership between NPCI and the NUE.
NPCI is an initiative of the RBI and IBA. SBI, HDFC Bank, and Bank of Baroda own a total 24.2% stake in NPCI. The three process more than 50% of all digital transactions, comprising those made by their own customers and third-party networks such as UPI.
Last August, RBI unveiled the framework for setting up umbrella entities, with 26 February as the deadline.
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