RBI Notifications

New Umbrella Entity (NUE) for Retail Payment Systems

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NUE

Mains level : Payments regulation measure by RBI

The Reserve Bank of India (RBI) has proposed to set up a new pan-India new umbrella entity (NUE) or entities focussing on retail payment systems with a minimum paid-up capital of Rs 500 crore.

New Umbrella Entity (NUE)

  • The proposed entity will set up, manage and operate new payment systems especially in the retail space.
  • It would comprise of but not limited to ATMs, white label PoS, Aadhaar-based payments and remittance services, develop payment methods, standards and technologies, monitor related issues and internationally.
  • It would take care of developmental objectives like enhancement of awareness about the payment systems.
  • The RBI retains the right to approve the appointment of directors as also to nominate a member on the board of the NUE.
  • The NUE should conform to the norms of corporate governance along with ‘fit and proper’ criteria for persons to be appointed on its board.

Functions

It will:

  • operate clearing and settlement systems
  • identify and manage relevant risks such as settlement, credit, liquidity and operational and preserve the integrity of the system
  • 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

Terms of reference

  • The entity eligible to apply as promoter or the promoter group for the NUE should be ‘owned and controlled by residents’ with 3 years’ experience in the payments ecosystem as Payment System Operator (PSO) or Payment Service Provider (PSP) or Technology Service Provider (TSP).
  • The shareholding pattern should be diversified.
  • Any entity holding more than 25 per cent of the paid-up capital of the NUE will be deemed to be a promoter.
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