Reliance Jio, fintech firms, banks all in fray for e-pay NUE license

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The National Payments Corporation of India (NPCI), the umbrella organization for all retail payment systems will soon get a rival with at least five companies planning to apply for the license with the Reserve Bank of India (RBI) to become the country’s first New Umbrella Entity (NUE).

So Hum Bharat Digital Payments and Paytm Payments Bank are the two fintech ventures that are planning to apply for a license. Additionally, State Bank of India and HDFC Bank along with Reliance Jio may also apply for the license with the RBI. Jio already has a payments bank license and offers UPI-based payment service in the country.

Google, Facebook and Amazon are also reportedly in talks to partner with Indian promoters for an NUE, as per a recent report by the Economic Times.

In August, the RBI recently allowed the formation of an NUE that can set up a payments company for owning and operating a pan-India digital payments network and exercise the same powers as the NPCI, which currently offers services like managing ATMs, point of sales (PoS) machines, digital payments and remittances. The NUE could choose to be a for-profit entity or a not-for-profit as defined under Section 8 of India’s Companies Act.

So Hum Bharat Digital Payments, a new digital payments venture founded by ItzCash founder Naveen Surya, and Infibeam Avenues’ executive director Vishwas Patel, is currently in discussions with 10-15 founders of fintech and technology companies.

“We are talking with fintech companies, financial services, technology players and digital commerce players as well. Our philosophy – which also reflects in our name – is to make the payments process as effortless as, say, breathing. We are welcoming all prospective partners who will share a similar vision,” Surya said in a statement.

The new venture’s talks with these founders and companies are centred around raising the requisite regulatory capital before the deadline in February. It is looking to raise Rs 500- Rs 600 crore ($67-$81 million) over the next three months.

Both founders, along with three other unnamed individual investors, have made a combined seed investment of Rs 52 crore ($7.03 million) in the company.

Surya said that the new digital payments venture is positioning itself as a fintech-led payments network with support from the digital ecosystem. He said that the aim is to make the act of payment natural, effortless and invisible.

“Paytm Payments Bank is also looking to apply for the NUE as a bank with other partners,” a company source was quoted as saying by the Times of India.

As per the RBI guidelines, stipulate approved NUEs to have a minimum paid-up capital of Rs 500 crore ($67 million) and an additional risk capital of Rs 50 crore ($7.03 million). Additionally, a single promoter can’t have over 40% stake in the NUE, with a plan to dilute it to 25% over a period of five years.

“The umbrella entity may be permitted to participate in Reserve Bank’s payment and settlement systems, including having a current account with Reserve Bank, if required,” the central bank had said in the notification.

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