RBI extends application deadline umbrella entity for retail payments

RBI extends application deadline umbrella entity for retail payments

The Reserve Bank of India (RBI) has extended the deadline to apply for a New Umbrella Entity (NUE) to March 31 in view of the pandemic. The RBI had released a framework for authorisation of an umbrella entity for retail payments in the country last year and had invited applications from desirous entities by February 26, 2021.

The RBI intends to set up umbrella entity to focus on retail payments system in the country.

In a press release, RBI stated that it received requests from various stakeholders including Indian Banks' Association for extending the deadline, owing to the COVID-19 related disruptions and inconveniences.

It has been accordingly decided to extend the timeline for making the application up to March 31, 2021, it said.

The NUE is to be set up as a company as a for-profit under the Companies Act, 2013 and will get authorisation under the Payment and Settlement Systems Act, 2007 (PSS Act). Such entities will undertake tasks such as setting up, managing and operating new payment systems in retail space.

While the banking regulator has not yet made clear the specific mandate of the proposed NUEs, the broad scope as expressed by RBI includes setting up and operating new payment systems comprising ATM networks, point-of-sale (PoS) services, Aadhaar-based payments and remittances.

They are also expected to operate clearing and settlement systems for participating banks and non-banks, carry on any other business suitable to further strengthen the retail payments ecosystem in the country.

Such entities are also expected to interact and be interoperable, to the extent possible, with the systems operated by National Payments Corporation of India (NPCI).

The umbrella entity may be permitted to participate in Reserve Bank's payment and settlement systems, including having a current account with RBI, if required, the regulator had said in August last year