The Reserve Bank of India vide its notification dated 10th February 2020 has issued a draft framework for authorization of a pan-India new umbrella entity (NUE) for retail payment systems.
Resident Companies can apply to be authorized by RBI as an (NUE). The entity eligible to apply as promoter for the NUE shall be ‘owned and controlled by residents’ with three years’ experience in the payments ecosystem as Payment System Operator (PSO)/Payment Service Provider (PSP)/Technology Service Provider (TSP). The shareholding pattern shall be diversified. Any entity holding more than 25% of the paid-up capital of the NUE shall be deemed to be a promoter.
The NUE should have a minimum paid-up capital of Rs500 crore No single promoter / promoter group should own more than 40 per cent investment in the capital of the NUE. The promoters shall upfront demonstrate capital contribution of not less than 10 per cent, ie, Rs50 crore at the time of making an application for setting up of the NUE. The promoter / promoter group shareholding shall be diluted to a minimum of 25 per cent after 5 years of the commencement of business of the NUE. A minimum net-worth of Rs300 crore shall be maintained at all times.
The NUE shall be governed by the provisions of the Payment and Settlement Systems (PSS) Act, 2007 and other relevant statutes and directives, prudential regulations and other guidelines / instructions.
Further, the NUE will operate clearing and settlement systems, identify and manage relevant risks such as settlement, credit, liquidity and operational and preserve the integrity of the systems as well as monitor retail payment system developments and related issues in the country and internationally to avoid shocks, frauds and contagions that may adversely affect the systems or the economy in general.
The Reserve Bank invites comments on the above draft framework from all stakeholders by February 25, 2020. The comments may be sent by post to the Chief General Manager, Department of Payment and Settlement Systems, Reserve Bank of India, Central Office, 14th Floor, Shahid Bhagat Singh Marg, Mumbai-400001, or by email.
Click here to read the Notification.
