State Bank of India (SBI) is planning to challenge the monopoly of the National Payments Corporation of India (NPCI). The state-controlled lender may launch a rival digital payments ecosystem, as per reports.
According to a fresh report from ET, SBI wants to enter the country’s highly competitive but fast-growing, digital payments ecosystem as a primary stakeholder.
Currently, NPCI controls over 60 percent of payment volumes and provides services such as Unified Payments Interface (UPI), Immediate Payment Services (IMPS), and Bharat Interface for Money (BHIM).
As per the report, the senior management of SBI has held preliminary discussions regarding this move. And now they are examining the possibility of applying for a license under the Reserve Bank of India’s New Umbrella Entity (NUE).
Notably, last week, RBI releases NUE ‘s framework and also opens the window for applications. The entities can set up a payments company for owning and operating a pan-India digital payments network. Those entities also possess the same powers as NPCI.
SBI Examining the framework for New Umbrella Entity (NUE)
As per reports, an SBI spokesperson told ET,
“The framework is also being examining by SBI. As the presence of an additional entity may lead to further deepening of the digital retail payments ecosystem”.
Whereas the negotiations are in an early stage. And this new digital payments entity could have a joint ownership-based model between SBI and a promoter.
But there is one more option that this state-owned lender may partner with financial technology (fintech) startups. Interestingly, NPCI is a ‘not-for-profit’ entity under Section 8 of the Companies Act. Whereas, the SBI-run company entity would likely be a ‘for-profit’ entity.
However, reports also suggest that Mukesh Ambani’s Reliance Industries (RIL), Paytm, NSE and BSE were among top companies that were interested in obtaining licenses under RBI’s New Umbrella Entity (NUE) scheme.