RBI rejects proposals from Jio, Google and others for organisation to replace national payment corporation

The NUEs that they have pitched are a lot like NPCI and haven't matched up to RBI's expectations.

FPJ Web DeskUpdated: Saturday, January 07, 2023, 04:05 PM IST
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CII urges RBI to moderate pace of interest rates hikes | File/ Representative

The average Indian can now pay bills online without waiting in queues and everyday transactions at neighbourhood shops are conducted via QR codes instead of cash. All of this is facilitated by a single organisation called the National Payments Corporation of India, but the government is looking for an upgrade to it. Six consortiums, which included Facebook, Google, Amazon and Flipkart among others had bid for creating a replacement to NPCI.

But the Reserve Bank of India has rejected applications from all of them for the development of a New Umbrella Entity (NUE). The central bank argues that none of them have proposed anything which can be considered a breakthrough in technology. The NUEs that they have pitched are a lot like NPCI and haven't matched up to RBI's expectations.

The NPCI set up by the RBI manages clearing and settlements, for which it now seeks a more innovative replacement. SoHum Bharat, Jio, Tata, Airtel Digital, Kotak Bank, Mastercard, ICICI Bank, HDFC Bank, Axis Bank, Ola Financial, Policy Bazaar and other major players were all able to meet RBI's expectations. The NUE licence, which all the consortiums are bidding for, will allow them to establish firms for offering value-added lending and insurance.

NPCI is a non-profit which is burdened by the volume of transactions to be processed, and the NUE will bring in private firms to introduce competition and reduce risks. Every entity bidding for it must have paid up capital of Rs 500 crore and one promoter's stake can't exceed 40 per cent.

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