Page 38 - Banking Finance January 2022

ARTICLE

November 2020, the top shareholders of NPCI included contribution at the time of making an application for setting
Union Bank of India with 9.15 percent, Bank of Baroda with up the NUE. RBI has allowed the promoter or promoter
9.15 percent, PNB 9.15 percent, Canara Bank 8.14 percent, group shareholding to dilute minimum of 25% after 5 years
SBI 7.12 percent, Bank of India 7.12 percent, ICICI Bank of the commencement of the business of the NUE. A
7.12 percent, HDFC Bank 7.12 percent, HSBC Ltd 7.12 minimum net worth of Rs.300 crore shall be maintained at
percent and Citibank with 7.12 percent stake. all times.

As of February 2021, Its Unified Payments Interface (UPI) Understanding the working of NUE
handled 2,292.90 million transactions, worth Rs 4, 25,062.76
NUE will set up, manage and operate new payment systems
crore. It handled about half of India's nearly retail online
especially in the retail space comprising of but not limited
transactions, which are expected to double this year. To to ATMs, White Label, PoS and Aadhaar based payments,
address the "risk concentration" of only one platform and and remittance services, develop new payment methods,
offer consumers more options, RBI invited private standards and technologies in the country and
companies to bid for a license to set up a new platform.
internationally. NUE should take care of developmental
objectives like enhancement of awareness about the
Let's see the eligibility criteria for payment systems. NUE should operate in clearing and
applying to be a NUE? settlement systems, identify and manage relevant risks such
as settlement, credit, liquidity and operational and preserve
Any promoter or group who has three years of experience
in the payment ecosystem, as an operator, service provider the integrity of the systems. NUE can carry on any other
or technology service provider can apply for NUE. Also, any business as suitable to further strengthen the retail
payments ecosystem in the country.
entity holding more than 25% of the paid-up capital of the
NUE shall be deemed to be a promoter. If it's a foreign
investor, he should comply with the FDI policy and guidelines Functions Expected through NUE
of GOI and should also follow DIPP and FEMA policies. The Y NUEs will develop new payment methods, standards
applicant needs to follow corporate governance norms and and technologies.
should take RBI's approval for the appointments of board Y These will operate clearing and settlement systems,
members. identify and manage relevant risks such as settlement,
credit, liquidity and operation and preserve the integrity
Conditions stipulated to be a NUE of the system.
The first and foremost condition is, the applicant should be Y These will monitor retail payment system developments
Fit and Proper. RBI has clarified that the applicant entity and related issues in the country and internationally to
and promoter should be fit and proper and should have a avoid shocks, frauds and contagions that may adversely
track record of financial integrity, good reputation and affect the system and the economy in general.
character, and honesty. Such a person should not be
convicted by a court for any economic offense. Also, the
applicant should have been part of any offense under RBI,
such as, declared insolvents and not discharged and
financially not sound.

Capital Requirements
The entity applying for NUE shall have a minimum paid-up
capital of Rs.500 crore. The capital allocation should be done
for managing risks, invest in technological infrastructure, for
business operations. RBI has also disallowed from any single
promoter or group to hold more than 40% investment in
the capital of the NUE. RBI wants the promoters to
demonstrate not less than 10% i.e. Rs.50 crore, capital

38 | 2022 | JANUARY | BANKING FINANCE