Last date to apply for for a licence to set up a pan-India umbrella entity for retail payments, has been extended from Feb 26 to March 31.

The Reserve Bank India (RBI) had released the framework for authorisation of pan-India umbrella entity for retail payments, which will rival National Payments Council of India (NPCI), on August 18, 2020, and invited applications from interested entities.

The process for complying with the framework prescriptions, a timeline of six months was provided (February 26, 2021).

RBI received requests from various stakeholders including Indian Banks’ Association for extending the timeline, keeping in view the COVID-19 related disruptions and inconveniences. The apex bank has been accordingly decided to extend the timeline for submission of application up to March 31, 2021.

Multiple people aware of the development told CNBC-TV18 that at least four or five consortiums, comprising of banks, corporates, e-commerce and payment companies are keenly looking at the New Umbrella Entity (NUE) licence as the deadline to apply ends today.

The country’s largest public and private banks including State Bank of India, ICICI Bank, HDFC Bank, Bank of Baroda, Axis Bank, Kotak Mahindra Bank and Yes Bank are looking to participate in the NUE, CNBC-TV18 has learnt. The banks may come on board as investors when they apply for a license.

Among corporates, Reliance Industries through its subsidiary Reliance Jio Infocomm Limited, and Tata Group through company called Ferbine Private Limited are also seeking the NUE licence, multiple people aware of the development told CNBC-TV18.

Global companies like Amazon, Visa, MasterCard, and others like Bill Desk, PayU, Pine Labs, SoHum, Flipkart, and PayTM are also expected to join in the race as part of one or the other consortiums, said three people in the know.

In separate exchange notifications late last night, HDFC Bank and Kotak Mahindra Bank announced picking up of 9.99 percent stake each in Tata Group-promoted Ferbine Private Limited.

Ferbine was incorporated on January 18, 2021 to make an application to RBI for the NUE licence, the exchange notices said.

“The main business of the company would be to operating a pan-India umbrella entity for retail payment systems, as would be allowed/licensed by RBI, subject to the approval of the NUE application,” Kotak Mahindra Bank said.

The promoter of Ferbine is Tata Sons Private Ltd, Farida Khambata, a director of the bank, is also on the board of Tata Sons Ltd.

“The Tata consortium could also have MasterCard, PayU, others besides HDFC Bank and Kotak Mahindra Bank,” said a banking executive whose bank is also seeking the license.

"Goverment is yet to give SBI, Bank of Baroda approvals to apply for the NUE licence, so it remains to be be seen if they will make the deadline," said a public sector banker in the know.

“Reliance Jio may also bring on board some partners,” this person added.

“A consortium of SoHum led by CC Avenue, Navin Surya Chairman Emeritus of PCI and Yes Bank has already announced its intention to apply for NUE license,” said another industry executive.

Separately, Amazon, ICICI Bank, Axis Bank, Visa, Bill Desk, Pine Labs are expected to apply as one consortium, CNBC-TV18 has learnt.

“You see most of these large banks eyeing the NUE license also own stake in NPCI. So how will RBI ensure there is no conflict of interest,” opined another industry executive, adding that this aspect would have to be carefully examined by Reserve Bank while vetting the applications.

In all, 54 banks currently shareholders of NPCI include 17 public sector banks, 17 private banks, 3 foreign banks, 10 co-op banks, and 7 regional rural banks. As of November 2020, the top shareholders of NPCI included Union Bank of India with 9.15 percent, Bank of Baroda with 9.15 percent, PNB 9.15 percent, Canara Bank 8.14 percent, SBI 7.12 percent, Bank of India 7.12 percent, ICICI Bank 7.12 percent, HDFC Bank 7.12 percent, HSBC Ltd 7.12 percent and Citibank with 7.12 percent stake.

The Reserve Bank of India had invited applications to set up the NUE in August last year, setting February 26, 2021 as the last date for applications. RBI guidelines mandate that applicants have at least three years of experience in the payments space, and a minimum paid-up capital of Rs 500 crore to be eligible to apply.

The new umbrella entity will be entitled to set up, manage and operate new payment systems in the retail space including ATMs, PoS, Aadhaar-based payments and remittance services. The NUE is expected to develop systems that able to interact and be interoperable to the extent possible with the existing systems operated by NPCI.

Unlike NPCI, the NUE can be a for-profit entity. No single promoter is allowed to have more than 40 percent investment in the capital of the NUE, as per RBI guidelines. The promoter shareholding can be diluted to a minimum of 25 percent after five years of the commencement of business of the umbrella entity. The NUE would also have to maintain a minimum net-worth of Rs 300 crore at all times.

(Edited by : Pranati Deva)

First Published:Feb 26, 2021 8:01 AM IST