Reliance, Paytm & Others To End NPCI Monopoly. What Is NUE Licence – Free PDF

What has happened?

  • Last date to apply for a licence to set up a pan-India umbrella entity for retail payments,  has been extended from Feb 26 to March 31.
  • The Reserve Bank India (RBI) had released the framework for authorisation of pan-India umbrella entity for retail payments,
  • Which will rival National Payments Council of India (NPCI), on August 18, 2020, and invited applications from interested entities.

What is Retail payment system?

  • Retail payments usually involve transactions between two consumers, between consumers and businesses, or between two businesses.
  • Although there is no definitive division between retail and wholesale payments,
  • Retail payment systems generally have higher transaction volumes and lower average values than wholesale payment systems.

National payment corporation of India

  • NPCI, a ‘not-for-profit’ entity registered under section 8 of Companies Act, is owned by a consortium of leading public and private sector banks.
  • It is directly responsible for functioning of highly important digital payment channels such as Unified Payment Interface, NACH, National Financial Switch (NFS) and IMPS.
  • The NPCI, set up in 2008, currently dominates the retail payments space and operates more than 12 such platforms.

  • 54 banks currently shareholders of NPCI include 17 public sector banks, 17 private banks, 3 foreign banks, 10 co-op banks, and 7 regional rural banks.
  • As of November 2020, the top shareholders of NPCI included-
  1. Union Bank of India with 9.15%
  2. Bank of Baroda with 9.15%
  3. PNB 9.15%
  4. Canara Bank 8.14%
  5. SBI 7.12%
  6. Bank of India 7.12%
  7. ICICI Bank 7.12%
  8. HDFC Bank 7.12%
  • The RBI, in February 2019, had proposed to create an alternative umbrella organisation for retail payments to prevent monopoly and concentration risk.
  • In a policy paper, the central bank had suggested that the NPCI became ‘too big to fail’.


  • The Reserve Bank of India has issued final guidelines for a new umbrella entity for retail payments systems, which will have an option to operate as a “for-profit” entity.

Who can apply?

  • Payments system operators, and payments and technology service providers
  • With three years of experience are eligible to apply and set up the new pan-India platform.
  • The last date to apply for a licence is 26, 2021, now extended till 31st March.

What RBI expect from new entity?

  • It’s expected that the [new] umbrella entity shall offer innovative payment systems,
  • To include hitherto excluded cross-sections of the society, and which enhances access, customer convenience and safety, and the same shall be distinct yet interoperable.
  • What the new entity can do?
  • The alternative umbrella entity can set-up, manage and operate new retail payment systems related to- Automated-teller-machines, white-label point-of-sale devices, Aadhaar-based payments and remittances services.
  • The NUE is expected to develop systems that able to interact and be interoperable.

So, who have applied for NUE licence?

  • At least four or five consortiums, comprising of banks, corporates, e-commerce and payment companies are keenly looking at the New Umbrella Entity (NUE) licence as the deadline to apply ends soon.
  • The country’s largest public and private banks including State Bank of India, ICICI Bank, HDFC Bank, Bank of Baroda, Axis Bank, Kotak Mahindra Bank and Yes Bank are looking to participate in the NUE.
  • Goverment is yet to give SBI, Bank of Baroda approvals to apply for the NUE licence, so it remains to be be seen if they will make the deadline.
  • Among corporates, Reliance Industries through its subsidiary Reliance Jio Infocomm Limited, and Tata Group through company called Ferbine Private Limited are also seeking the NUE licence.
  • Global companies like Amazon, Visa, MasterCard, and others like Bill Desk, PayU, Pine Labs, SoHum, Flipkart, and PayTM are also expected to join in the race as part of one or the other consortiums.

Remember this

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

Will it replace NPCI?

  • Any retail payments solutions created by the new umbrella entity or entities should interact and be interoperable with existing systems operated by the National Payments Corporation of India, the RBI said.
  • That means the new entity will compete on developing new retail payments technology and not necessarily replace payments platforms operated by the incumbent.

Q) Banking in India has its origin. as early as?

  1. Indus civilization period
  2. Vedic period
  3. Mughals period
  4. British period




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