COMPANIES CAN SET UP RETAIL PAYMENT SYSTEMS, RBI UNVEILS FRAMEWORK

The Reserve Bank o n Tuesday unveiled the framework for setting up umbrella entit ies for operating pan-India retail payments systems and invited applications from eligible companies by Februar y 26, 2021.

As per the framework, the companies with a net worth of over Rs 500 cro re will be e ligible to set up an umbrella entity which among other things will be permitted to set up, manage and ope rate new payment systems in the retail space comprising ATMs, White Label PoS, Aadhaar-based payments and remittance ser vices.

"The Reserve Bank invites applications for the umbrella entity which shall be submitted in the prescribed form (Form A) till the close of business on Februar y 26, 2021," said a central bank press release.

Among other things, the umbrella e ntity will be permitted to op erate clearing and settlement sy stems for banks and non-banks; identify and manage relevant risks such as settlement, credit, liquidity and operational; and preser ve the integrity of the system.

It will a lso be e xpected to monitor retail payment system dev elopments and related issues in t he countr y and internationally to avoid shocks, frauds and contagions that may adversely affect the sys tem and/or the economy in general, the RBI said.

"All entities eligible to apply as promoter/promoter group of the umbrella entity shall be owned and controlled by resident Indian citizens''," it added.

In case of a ny foreign direct investment in the applicant entity, it will have to fulfil, additionally, the capital requirements as applic able under FEMA ( Foreign Exchange Management Act), an d necessary approval from the competent authority .