MUMBAI: The central bank is paving the way for a separate entity to carry out payment and settlement activities within the country which will bring down transaction costs, including credit card transactions.
The new entity — National Payments Corporation of India (NPCI) — will be set up by the Indian Banks’ Association (IBA) and will be owned jointly by banks. However, no bank or group of banks will be allowed to hold more than 10% of the ownership while 51% of the equity will be held by public sector banks, according to Reserve Bank of India deputy governor V Leeladhar.
Speaking at a conference on Friday, Mr Leeladhar said, “The setting up of this umbrella organisation would bring greater efficiency by way of uniformity and standardisation in retail payments, expand its reach and bring innovative payment products to augment customer convenience.” Further, the NPCI will be a Section 25 company — which will not distribute its profits as dividend, but will plough it back for the improvement and expanding the reach of the retail payment systems.
Also, now that the Payment and Settlement Systems Act 2007 has been ratified by Parliament, it is going to be notified by the government in a week or two, following which it will come into force, the deputy governor said. He also highlighted various other initiatives RBI plans to take in the payments and settlements space like satellite banking and mobile banking.
At the same time, IBA deputy CEO K Unnikrishnan said most of the reservations that various unions had against the setting up of the separate entity have been addressed, and that they are confident of receiving the license for the company by August 15. He added the NPCI will carry out all sorts of financial settlements apart from RTGS settlements which will continue to be under the purview of the central bank. (RTGS or realtime gross settlements are used for all electronic payments over Rs 1 lakh.)
“NPCI will also form a switch for ATMs and point of sale (PoS) terminals and pave the way for the IndiaPay concept,” said Mr Unnikrishnan.
The new entity — National Payments Corporation of India (NPCI) — will be set up by the Indian Banks’ Association (IBA) and will be owned jointly by banks. However, no bank or group of banks will be allowed to hold more than 10% of the ownership while 51% of the equity will be held by public sector banks, according to Reserve Bank of India deputy governor V Leeladhar.
Speaking at a conference on Friday, Mr Leeladhar said, “The setting up of this umbrella organisation would bring greater efficiency by way of uniformity and standardisation in retail payments, expand its reach and bring innovative payment products to augment customer convenience.” Further, the NPCI will be a Section 25 company — which will not distribute its profits as dividend, but will plough it back for the improvement and expanding the reach of the retail payment systems.
Also, now that the Payment and Settlement Systems Act 2007 has been ratified by Parliament, it is going to be notified by the government in a week or two, following which it will come into force, the deputy governor said. He also highlighted various other initiatives RBI plans to take in the payments and settlements space like satellite banking and mobile banking.
At the same time, IBA deputy CEO K Unnikrishnan said most of the reservations that various unions had against the setting up of the separate entity have been addressed, and that they are confident of receiving the license for the company by August 15. He added the NPCI will carry out all sorts of financial settlements apart from RTGS settlements which will continue to be under the purview of the central bank. (RTGS or realtime gross settlements are used for all electronic payments over Rs 1 lakh.)
“NPCI will also form a switch for ATMs and point of sale (PoS) terminals and pave the way for the IndiaPay concept,” said Mr Unnikrishnan.
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