Reserve Bank of India puts new payment network plan on hold
- ByAyushi Ray | August 25, 2021
Reserve Bank of India puts new payment network plan on hold, consisting of allowing new entities to create digital payment platforms and to end the National Payments Council of India’s (NPCI) dominance in online transactions. At least six consortiums, including those led by Amazon, Google, Facebook and the Tata group, applied for the so-called new umbrella entities (NUEs) licences, in partnership with companies such as Reliance Industries Ltd and ICICI Bank Ltd after the Reserve Bank of India (RBI) invited expressions of interest last year. Public sector lenders such as State Bank of India and Union Bank were, however, barred by the finance ministry from seeking licences as they were shareholders in NPCI.
“RBI feels the issue of data security involving foreign entities remains a key concern and, therefore, has decided to not go ahead with the new licences for now,’’revealed a close source. The central bank’s move was, however, met with criticism from bank unions from the start, and neither were state-run lenders happy about their exclusion. The unions raised concerns about allowing foreign entities to set up payment networks in India. The All India State Bank of India (SBI) Staff Federation and the UNI Global Union urged RBI to scrap the licensing process and focus on strengthening NPCI, Reuters reported in June. Last year, RBI invited companies to bid for licences to set up for-profit digital payments processing platforms to cut concentration risks in the payments sector and offer users more options. RBI had then said the payments network would be allowed to charge fees for transactions.
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