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Reserve Bank of India has unveiled the framework for setting up of pan-India Umbrella Entity for Retail Payments. What is the minimum required net worth of a company to be eligible to set up a pan-India Umbrella Entity for Retail Payments? (August 2020)

Reserve Bank of India has unveiled the framework for setting up of pan-India Umbrella Entity for Retail Payments. What is the minimum required net worth of a company to be eligible to set up a pan-India Umbrella Entity for Retail Payments? (August 2020) Correct Answer 500 crore rupees

The correct answer is 500 crore rupees.

  • On 18th August 2020, the Reserve Bank of India has unveiled the framework for setting up of pan-India Umbrella Entity for Retail Payments.
  • As per the framework, the companies with a net worth of over 500 crore rupees will be eligible to set up an umbrella entity.
  • These entities will be permitted to set up, manage, and operate new payment systems in the retail space comprising ATMs, White Label PoS, Aadhaar-based payments, and remittance services.
  • It will manage clearing and settlement systems for participating banks and non-banks, and also monitor developments in the retail payment system and related issues, both in India and abroad.
  • The entity will reduce the monopoly of NPCI.

Eligibility, terms, and other requirements for setting up the entity:

  • The company must have a minimum paid-up capital of ₹500 crores and strive for interoperability with NPCI systems.
  • Applicants must also have at least three years of experience in the payments ecosystem.
  • The entity formed shall be a company incorporated in India under the Companies Act, 2013, and maybe a ‘for-profit’ or a Section 8 Company.
  • No single promoter or promoter group should have more than 40% investment in the capital of this entity.
  • Initially, the promoter should have a minimum of Rs 50 crore at the time of submitting the application.
  • The promoter/promoter group shareholding may be diluted to a minimum of 25% after 5 years of commencement of business of the umbrella entity, and a minimum net worth of Rs 300 crore be maintained at all times.

About NPCI:

  • NPCI (National Payments Corporation of India) was incorporated as a not-for-profit company under the provisions of the Companies Act to provide infrastructure to the entire banking system in India.
  • The 10 core promoter banks are SBI, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank, and HSBC.
  • Headquarters: Mumbai
  • Founded: 2008

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