Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment



  • The private companies have shown interest in setting up New Umbrella Entities (NUEs) for payment systems – an idea floated by the Reserve Bank of India (RBI).
  • The aim is to create an alternate mechanism to the existing National Payments Corporation of India (NPCI).



New Umbrella Entities (NUEs):

  • About: NUEs will be a non-profit entity that will set-up, manage and operate new payment systems, especially in the retail space such as ATMs, white-label PoS; Aadhaar-based payments and remittance services

Functions Envisaged:

  • NUEs will develop new payment methods, standards and technologies.
  • These will operate clearing and settlement systems, identify and manage relevant risks such as settlement, credit, liquidity and operation and preserve the integrity of the system.
  • These will monitor retail payment system developments and related issues in the country and internationally to avoid shocks, frauds and contagions that may adversely affect the system and the economy in general.

Need for NUEs:

  • Limitations of NPCI: Currently, the umbrella entity for providing retail payments system is NPCI, which is a non-profit entity, owned by banks.
  • NPCI operates settlement systems such as UPI, AEPS, RuPay ,Fastag etc.
  • Players in the payments space have indicated the various pitfalls of NPCI being the only entity managing all of retail payments systems in India.
  • To Increase Competitiveness: RBI’s plan to allow other organisations to set up umbrella entities for payments systems aims to expand the competitive landscape in this area.
  • Players planning to establish these NUE aim to get an even bigger share in the digital payments sector.

Framework Related to NUEs:

  • Owned and Controlled by Residents: The promoter or the promoter group for the NUE should be ‘owned and controlled by residents’ with 3 years’ experience in the payments ecosystem.
  • The shareholding pattern should be diversified. Any entity holding more than 25% of the paid-up capital of the NUE will be deemed to be a promoter.
  • The umbrella entity shall have a minimum paid-up capital of Rs. 500 crore.
  • No single promoter or promoter group should have more than 40% investment in the capital of the entity.
  • A minimum net worth of Rs. 300 crore should be maintained at all times.
  • Governance Structure: The NUE should conform to the norms of corporate governance along with ‘fit and proper’ criteria for persons to be appointed on its board.
  • The RBI retains the right to approve the appointment of directors as also to nominate a member on the board of the NUE.
  • Allowed in NUEs as long as they comply with the existing guidelines.



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