On August 18, the regulator bank RBI released the framework for authorizing umbrella entities for retail payments, pan-India.
Consequently, over a week later, the State Bank of India came into light about plans to set up an entity, carving its path in India’s digital payments ecosystem, as primary stakeholder.
Reports are now in, that following SBI’s suit, India’s largest private lender by assets, HDFC Bank is planning to set up a pan India umbrella entity to boost retail payment in the country.
Is HDFC Next?
According to reports, HDFC Bank is now planning to set up a payments body, adding another anticipated rival to the National Payments Corporation of India (NPCI), second to SBI.
Even though the matter is in preliminary stages as we speak, HDFC Bank is surely working on bringing the idea of NUE (New Umbrella Entities) into reality.
To strengthen its case, HDFC Bank is one of the leading players in India’s payment systems, holding over 17 lakh merchant acceptance points via it’s digital payments solution.
In fact, not just HDFC Bank, Jio, Paytm, BSE and NSE too are planning to set up their own umbrella entities.
RBI’s Framework Leading to Authorisation of NUE
As mentioned above, RBI released the framework for authorising pan-India umbrella entities for retail payments on August 18.
However, it hasn’t specified if it will issue a single license or multiple licenses. You can send in applications for the same only until February 26, 2021.
What will be Expected of Umbrella Entities?
Licensed umbrella entities’ scope of activities will involve:
- Setting-up, managing and operating the new payment systems in the retail space,
- Issue related to monitoring this space, domestically (in country) and internationally, and
- Overseeing (taking care of) developmental objectives, like promoting and improving awareness of payment systems.
RBI also added in the framework, “It is also expected to interact and be interoperable, to the extent possible, with the systems operated by NPCI”.
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