On 10 February 2020, the Reserve Bank of India (RBI) released Draft Framework for authorisation of a pan-India New Umbrella Entity (NUE) for Retail Payment Systems. Such an entity shall be a Company incorporated in India under the Companies Act, 2013. The Company may be a ‘for-profit’ or a Section 8 Company as may be decided by it, said RBI in a statement.
The NUE shall be a Company authorised by RBI under Section 4 of the Payment and Settlement Systems Act, 2007 (PSS Act). According to the Central Bank, the provisions of the PSS Act and other relevant statutes and directives, prudential regulations and other guidelines / instructions shall govern it.
The Reserve Bank had invited comments on the draft framework from all stakeholders by February 25, 2020.
Highlights of NASSCOM’s Submission
Based on member consultation and our internal discussions, we are of the view that the document has been drafted comprehensively and provides a much-needed competitive boost to the retail payments landscape, especially from the perspective of all the participants in the payment ecosystem for whom the opening up of this market represents several new opportunities. However, there are some recommendations from our end, which are as follows:
1. There should be clear demarcation between the regulatory, monitoring and supervisory activities that will have to be undertaken by the NUE. An exhaustive list of activities under each should also be provided in the final framework.
2. The exact role sought to be played by the NUE should be specifically set out in the final version of the framework, in order to avoid any ambiguity especially on the part of other participants in the payment ecosystem.
3. A greater deliberation on this issue is desirable with all stakeholders before any framework is finalised.
We look forward to finalization of the proposed framework and we would be happy to assist RBI at any stage.