Page 50 - Banking Finance November 2021

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Apart from it, any entity having more than 25% of the paid- Working under NUE
up capital of the NUEwill also be deemed to be
a promoter. In the case of a foreign investor,
he or she is required to comply with the FDI
(Foreign Direct Investment) policy and
guidelines of the government of India and must
also follow DIPP (Department of Industrial
Policy and Promotion) and FEMA (Foreign
Exchange Management Act) policies.

The applicant is required to follow corporate
governance norms and should take the
approval of RBI for the appointment of board
members.

Conditions for becoming member of NUE shall set up, manage and operate new payment
NUE systems especially in the retail space including but not
limited to ATMs, white-label, PoS (Point of Sale) and Aadhar
o The primary condition to become an NUE is that the
applicant must adopt Fit and Proper model. RBI has based payments and remittance services, develop new
stated that the applicant entity and the promoter payment method, standards, and technologies and monitor
related issues in the country and internationally. NUE shall
should be fit and proper and must have a track record
of financial integrity, good reputation and character, take care of the developmental objectives, such as the
and honesty. enhancement of awareness about the payment systems.
Such a person should not have incurred It should operate in clearing and settlement systems,
disqualifications such as- identify relevant risks and manage them such as settlement,
o He must not be convicted by a court for any economic credit, liquidity, and operational and also preserve the
offense; integrity of the systems. It shall fulfill its policy objectives
and make sure that the principle of fairness, equity, and
o Declared insolvent and not discharged;
competitive neutrality is applied in determining participation
o Not financially sound; and
in the system.
o Of unsound mind.
It shall frame necessary rules and the related processes to
Capital requirements under NUE ensure the safety of the system and that the payments are
exchanged efficiently. NUE may carry on any other business
The entity applying for the NUE must have a minimum paid-
up capital of 500 CroreRupees. Capital allocation should be as suitable to strengthen the retail payments ecosystem in
done to support or address the need for capital for managing the country.
risk, invest in technological infrastructures, for business
operations, etc. As per RBI any single promoter or group Business plan for setting up of NUE
not to have more than 40% investment in the capital of the
NUE. RBI requires the promoters to demonstrate not less
than 10% that means 50 crore rupees, capital contribution
at the instance of making the application for setting up the
NUE. RBI has allowed the promoter or the promoter group
shareholding to dilute a minimum of 25% after five years of
the start of the business of the NUE. A minimum net worth
of 300 crore Rupees shall be maintained at all times.

50 | 2021 | NOVEMBER | BANKING FINANCE