On 18th Aug 2020, the Reserve Bank of India has revealed a new structure to set up PAN India umbrella entities for retail payments

These new umbrella entities will manage and operate a new payment system in the space of retail payment. 

NUE must be an entity incorporated under the Companies Act, 2013. These new umbrella entities or NUE can be profit organizations or non-profit organizations as per the definition provided under section 8 of the Companies Act, 2013. 


Important features of New Umbrella Entity (NUE) for Retail Payment Systems

A.  Objective: To form a PAN- India umbrella entity or entities that will set up, manage, and operate a new payment system in retail payment.

B.  Governing Authority: The umbrella entity has to be a company incorporated under the Companies Act, 2013 and they will be authorized by the Reserve Bank of India as per section 4 of the PSS Act, 2007. The NUE will be governed by the provisions of the PSS Act and other applicable guidelines or instructions or statutes and directives and prudential regulations.

C.  Promoters and Shareholding: Only Indian citizens can be the eligible entities to be the promoter or the promoter group of the NUE and will own and control the same. These eligible entities must have 3 years of experience in the payments ecosystem as Payment System Operator (PSO) or Payment Service Provider (PSP) or Technology Service Provider (TSP).

The promoter or the Promoter group of the NUE has to provide the RBI a ‘fit and proper’ criterion. A person can only become a Director of the promoter company or the group company if they provide the RBI a ‘fit and proper’ criterion. The ‘Fit and Proper’ criteria are as follows:

  1. A person must have a record of fairness and integrity
  2. Must possess good reputation and character
  3. Should be an honest person.
  4. Should not have been convicted by any court for any offence
  5. Should not be declared as insolvent
  6. The person must not be of an unsound mind.
  7. The person should not be financially weak.


D.  Main object: The proposed activities of operating a pan-India umbrella entity for retail payment systems should be the main object of the applicant entity and the same should be mentioned in their Memorandum of Association.

E.  Foreign Investment: To have the foreign Investment, the applicant entity has to take prior approval from the concerned authority and must fulfill all the requisite requirements as per the rules and regulations framed under the FEMA.

F.  Capital: The NUE must have a minimum paid-up capital of ?500 crores. Single Promoter or Promoter Group shall not have more than 40% investment in the capital of the umbrella entity. The Promoters or Promoter Groups shall have to make a capital contribution of not less than 10% i.e., ?50 crores at the time of making an application for setting up the umbrella entity.

The balance capital has to be secured at the time of commencement of business or operations. After five years from the date of starting operations as an umbrella entity, the promoter or promoter group can dilute shareholding to a minimum of 25%. A minimum net-worth of ?300 crores shall have to be maintained at all times by the NUE.

G.  Scope of Activities: The scope of activities of the umbrella entity are as follows:

  • To set-up, manage, and operate new payment system(s) in the retail space but should not be limited to ATMs, White Label PoS; Aadhaar based payments and remittance services; newer payment methods, standards, and technologies; monitor related issues in the country and internationally; take care of developmental objectives like increase of awareness about the payment systems.
  • Operate clearing and settlement systems for participating banks and non-banks. They should also identify and manage related risks such as settlement, credit, liquidity, and operational and must always ensure to preserve the integrity of the system(s).
  • They should always monitor and regulate the payment system in order to maintain the integrity and fairness in the retail payment ecosystem of the country and also internationally. They should always have proper checks on the system in order to avoid any shock or fraud in the retail payment system.
  • It can carry any other business to strengthen the retail payment system of the nation. The entity must always amend them selves with the existing situation and must always bring innovativeness in the retail payment system. 
  • They can also interact and exchange information with the NPCI. NPCI is a current retail payment system operator in India
  • The NUE can have the permission of RBI to participate in Reserve Bank’s payment and settlement systems, which also includes having a current account with Reserve Bank if required.

H.  Governance Structure: In case of appointing any person on the Board, the umbrella entity shall follow the norms of corporate governance along with ‘fit and proper’ criteria. The RBI has the right to approve the appointment of Directors as well as to nominate a member on the Board of the umbrella entity.

I.  Procedure for Application: The application must be submitted in an envelope superscribed “Application for Umbrella Entity ”, addressed to the Chief General Manager, Department of Payment and Settlement Systems, Central Office, Reserve Bank of India, 14th Floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai – 400 001. The application must be submitted in the prescribed form i.e Form A till the close of business hours on February 26, 2021.

J.  Procedure for Processing of Applications: The RBI after the last date of submission of application will take the same for processing. External Advisory Committee (EAC) will do the scrutiny of the applications. The EAC after the scrutiny will submit its recommendations to the Reserve Bank. Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), will be the final authority on issuing authorization for setting up an umbrella entity. Reserve Bank will try to complete the process within a period of 6 months.

RBI circulars for the NUE :
i.  RBI at first placed the framework on its website on February 10, 2020 :


ii.  On 18th August 2020: 


Edited by Minu Mishra

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