RBI extends the deadline to apply for an umbrella entity till March 31

The RBI on Friday (Feb 26) extended the deadline to apply for an umbrella entity, which the central bank wants to set up to focus on retail payments system in the country, by over a month to March 31 in view of the pandemic.

In August last year, RBI invited applications from desirous entities by February 26, 2021. The retail payment activities include ATMs, White Label PoS; Aadhaar based payments and remittance services; newer payment methods, standards and technologies; monitor related issues in the country and internationally; taking care of developmental objectives like enhancement of awareness about the payment systems etc. These entities are also expected to operate clearing and settlement systems for participating banks and non-banks, carry on any other business suitable to further strengthen the retail payments ecosystem in the country.They are also expected to interact and be interoperable, to the extent possible, with the systems operated by National Payments Corporation of India (NPCI).

The umbrella entity may be permitted to participate in Reserve Bank’s payment and settlement systems, including having a current account with RBI, if required, the regulator had said in August last year.

For setting up an umbrella entity for retail payments, the promoters shall have a minimum paid-up capital of Rs.500 crore and a minimum net-worth of Rs.300 crore to be maintained at all times. Individual Promoter or Promoter Group shall not have more than 40% investment in the capital of the umbrella entity. The Promoters / Promoter Groups shall prove the upfront capital contribution of not less than Rs.50 crore at the time of making an application for setting up of the umbrella entity. The balance capital shall be secured at the time of commencement of business/operations. However, the Promoter / Promoter Group shareholding can be diluted to a minimum of 25% after 5 years of the commencement of business of the umbrella entity.