Six consortia apply for a New Umbrella Entity license

Leading banks, fintech, and India Inc companies are banding together to apply for the retail payments new umbrella entity license. Approximately six such consortiums are applying for the license, according to industry sources. The The Reserve Bank of India had set the deadline to apply to March 31 . Earlier, Policy Bazaar joined the Paytm-Ola-Indusind Bank consortium for a NUE license. 

Six consortiums, including those led by Reliance Industries, Tata Group, and Axis-ICICI Bank, submitted applications to the RBI on Wednesday. The application is there to create a national payments infrastructure to compete with the payments behemoth National Payments Corporation of India (NPCI). Paytm, India Post, and Fintech company iserveU are leading the other consortiums. 

Tata Sons promoted Ferbine Private Ltd, in which HDFC Bank and Kotak Mahindra Bank have stakes, is expected to apply for the licence, as previously announced.  This includes Mastercard also. Axis Bank and ICICI Bank, as well as Amazon, BillDesk, Pine Labs, and Visa, are leading another consortium. Hum Bharat Digital Payments, as well as other fintech and payment companies, are part of a third consortium. Paytm is leading a fourth consortium, which is expected to include IndusInd Bank, Suryoday Small Finance Bank, Ola, Centrum Finance, and PolicyBazaar. 

The India Posts Payments Bank is also said to be in talks with some players, including Razorpay, to obtain a license for the umbrella entity. 

On Wednesday, a consortium led by Reliance Industries and Infibeam Avenue also submitted its proposal. Facebook and Google are expected to own a small portion of this business. 

New Umbrella Entity License

A NUE license will help the entity gain more control in India when it comes to handling digital payments. According to senior industry sources, this will help the company develop a strong presence in the financial services ecosystem through value-added lending and insurance services.

Last August, the RBI released guidelines for businesses to build for-profit NUEs to promote competition and “de-risk” India’s emerging digital payments ecosystem, where the non-profit NPCI has taken on most of the settlement burden in recent years.

The structure for the umbrella entity for retail payments aims to assist organisations in developing, managing, and running new payment systems in the retail space. This includes ATMs, White Label PoS, Aadhaar-based payments and remittance services, newer payment methods, standards, and technologies, as well as clearing and settlement systems for participating banks and non-banks.

According to the guidelines, the umbrella entity must have a minimum paid-up capital of 500 crores, and no single promoter or promoter group shall have more than 40% of the umbrella entity’s capital. 

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Rajat Chawda

Rajat is a student at the Institute of Law, Nirma University. Since a young age, he was fascinated by the technological advancements and his fascination with gadgets has helped him develop a keen interest in TMT Laws in his journey as a law student. He is associated with Mylawrd to further engage himself and learn in this area.

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