RBI move to create a counterpart to NPCI needs a rethink – The Hindu BusinessLine

Introducing a commercial competitor to the NPCI, ‘not for profit’ company, raises a wide range of questions

The RBI’s proposed plan to set up a for-profit umbrella entity to manage digital payments in the country alongside the not-for-profit National Payments Corporation of India (NPCI) is somewhat perplexing. It underscores the uncertainties around managing and regulating the still-evolving web-enabled payments and settlement systems in India. Draft guidelines issued by the central bank recently suggest that the RBI would seek applications from private companies for a “New Umbrella Entity” for retail payment systems. The NPCI, the incumbent umbrella entity that is credited with transforming India’s digital payments landscape, has been in existence for over a decade. A ‘not for profit’ company, the NPCI has been set up by the RBI and the Indian Banks’ Association as a consortium of six public sector banks and four private banks. Besides bringing innovations in the retail payment systems, it is also effectively handling a sea of online financial data. Its unique payments platform, Unified Payment Interface or UPI, has been well accepted. Just last month, the UPI saw more than 130 crore transactions that led to a money transfer worth ₹2.16-lakh crore, an all-time high. The NPCI also supports and promotes Aadhaar-enabled payments services and the RuPay card network. It collaborates with nearly 144 banks. Sparing some alleged issues around transaction delays and network compatibility bugs, the NPCI platform has done reasonably well.