Under the RBI NUE policy, private sector companies can set up pan-India retail payments entities with similar powers as the National Payments Corporation of India (NPCI).
The group, comprising associations such as UNI Global Union, IT for Change, Joint Action Committee Against Foreign Retail and E-commerce (JACAFRE) and the All India State Bank of India Staff Federation (AISBISF), also raised objections around multinational corporations —particularly Amazon.com Inc.—being allowed to own private NUEs under the framework.
“Our submission is at three levels. At the first level, we would like to contest the very need of setting up NUEs in competition to NPCI, which operates as a quasi-public body, in a non-profit manner,” the letter sent to the banking regulator read.
ET has seen a copy of the letter.
“We are not sure why India would choose to squander this advantage, and head-start, by now privatising digital payment infrastructure platforms. Payment systems, like currency management, are the lifeblood of an economy, and an extremely critical infrastructure for any country,” it added.
News wire Reuters
was the first to report about the letter.
The group also raised concerns of potential abuse of user data by firms vying for the NUE licences as well as competition risk to India’s indigenous payments networks such as RuPay and Unified Payments Interface (UPI), which are owned and operated by NPCI.
The Economic Times was the first to report that four major consortiums
are vying for the NUE licences. These include:
- Reliance Industries, Infibeam Avenues, Facebook and Google
- Tata, Kotak Mahindra Bank, HDFC Bank, Nabard, Mastercard and Flipkart
- Paytm, Ola Financial, IndusInd Bank, PolicyBazaar and Zeta
- Amazon, ICICI Bank, Axis Bank, Pine Labs, BillDesk and Visa
Two other consortiums are also learnt to be in the fray for NUE licences, which the central bank
is expected to hand out in November.
State Bank of India (
) was also in the fray to submit its own NUE along with Bank of Baroda, but the finance ministry
red-flagged the proposal even before the bid was officially presented to RBI, citing competition risks. ET was the first to report this as well.
Tata takes over SBI bid for NUE licence from RBI
With the purpose of reducing concentration risks in India’s retail payments ecosystem, RBI last year invited companies to come together and set up NUEs pursuant to basic eligibility criteria. The NUE will be allowed to operate new payment systems, including real time networks, remittance channels, Aadhaar-related systems and even ATM transactions.
“It is even more unthinkable that MNCs should be allowed to be a part of consortiums applying for NUE license. Payment infrastructures are one of society’s richest mines of data, and access of MNCs to such a data mine would compromise India’s data sovereignty,” the letter said, adding that the central bank must instead focus on strengthening NPCI.
The vocal group of critics also asked the central bank to not allow Amazon in particular to set up the NUE, highlighting the several ongoing investigations in India and abroad faced by the US-based etailer, allegedly over its business practices.