New Umbrella Entity (NUE) Network : RBI
RBI is said to have put on hold licensing of the New Umbrella Entity (NUE) network, a fintech institution planned as a rival to the National Payments Corporation of India (NPCI).
- Six groupings, which included Facebook, Google, Amazon, Flipkart and others, had applied for NUE licences, but none of them could meet the RBI’s expectations in bringing a technology breakthrough.
- The retail payment system facilitates the transfer of funds from consumers to merchants in exchange for goods and services.
- NUE is an entity (under the Companies Act 2013) that will manage and operate the new payment system in the retail sector such as ATMs, POS, UPI etc.
- It will also manage clearing and settlement systems that could be an alternative to the bank-promoted NPCI.
- It will be allowed to charge fees for transactions (unlike the existing NPCI)
- The RBI had in 2020 issued guidelines for corporates to create for-profit NUEs with an aim to foster competition and “de-risk” India’s burgeoning digital payments ecosystem, where much of the settlement burden has fallen on the non-profit NPCI over recent years
- NPCI was established by the RBI and the Indian Banks’ Association in 2008 modelled on the non-profit payments and settlement entity run by the Swedish central bank that’s owned and operated by banks.