Page 37 - Banking Finance January 2022

ARTICLE

NEW UMBRELLA

ENTITY - A GAME

CHANGER

N UEs will be a non-profit entity that will set-up, expected to develop systems that will be able to interact

manage and operate new payment systems,
and be interoperable to the extent possible with the existing
systems operated by NPCI.
especially in the retail space such as ATMs, white-
label PoS; Aadhaar-based payments and
remittance services. Unlike NPCI, the NUE can be a for-profit entity. No single
promoter is allowed to have more than 40 percent
The Reserve Bank of India had invited applications to set up investment in the capital of the NUE, as per RBI guidelines.
the NUE in August last year, setting February 26, 2021, as The promoter shareholding can be diluted to a minimum of
the last date for applications. RBI guidelines mandate that 25 percent after five years of the commencement of business
applicants have at least three years of experience in the of the umbrella entity. The NUE would be required to
payments space, and a minimum paid-up capital of Rs 500 maintain a net-worth of Rs 300 crore at all times.
crore to be eligible to apply. The new umbrella entity will
be entitled to set up, manage and operate new payment Digital transactions have doubled in the last two years,
systems in the retail space including ATMs, PoS, Aadhaar- faster than any major country outside China. Reports suggest
based payments and remittance services. The NUE is India's digital transactions may reach $2 trillion by 2023,
presenting a huge opportunity for players.

About the author Currently, all digital transactions are processed by the
National Payments Corporation of India, a non-profit,
Gijo Verghese umbrella organisation backed by 54 banks.
Senior Manager(Faculty)
Union Bank of India These include public sector banks, private banks, foreign

banks, co-op banks, and regional rural banks. As of

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