India taps private sector to set up new payments body
India’s central bank is taking applications from companies for efforts to set up a new umbrella entity for retail payments. The new organization could be a for-profit entity, and will operate alongside the bank-backed nonprofit National Payments Council of India (NPCI), which currently oversees retail payments in the country.
Why should we care?
The move to create a new payments oversight agency was driven by the need to reduce monopoly and concentration risk, and alleviate concerns the NPCI was “too big to fail.” Several high-profile Indian companies are reportedly interested, including Reliance and Paytm, along with foreign fintech companies. The launch of a new entity for payments comes as India’s digital payments ecosystem has expanded rapidly in recent years through initiatives like Aadhar (a digital identity program), Unified Payments Interface (a real-time payments system), and card network RuPay. The new agency will cater to the underserved, and its purview will include ATM networks, point-of-sale systems, Aadhar-based payments, remittances, along with settlement and clearing systems.