SBI, HDFC Bank & BoB may team up for a NUE payments entity

Mumbai: State Bank of India, HDFC Bank and Bank of Baroda are set to team up to explore forming a new mass-market payments entity which would compete with National Payments Corporation of India (NPCI) that operates the Unified Payments Interface, two people aware of the development told ET.The three lenders have initiated talks to make a joint application with SBI being the lead promoter. Several other lenders, a large technology firm, a card operator and a few payment network players are also expected to join the proposed bank-led payments consortium, they said. Under the central bank’s New Umbrella Entity (NUE) licence framework, applicants who are given the green light by RBI can own and operate a for-profit pan-India retail payments network.“SBI is seriously considering a bank-led consortium where HDFC Bank and Bank of Baroda would be key players. It is also in talks with several other banks and the structure of the consortium should take shape in a month,” one of the people said. The second person said the three banks teaming up made immense sense as they would add size and scale to the entity. “SBI, HDFC Bank and Bank of Baroda together may be processing more than half of transactions going through the banking system; not only would it make sense in terms of size but a bank-led model would help them share cost and benefits,” this person added. 78883246Framework Released in AugEmails to SBI, HDFC Bank and Bank of Baroda seeking comment didn’t elicit any response till press time Monday.SBI has a 26% market share in the remittance space, 30% in debit cards and 28% in ATMs. The state-owned bank has plans to leverage its network of 50,000-plus ATMs, 1 million lakh merchants and the YONO platform for the new umbrella entity.HDFC Bank is the leader in the merchant acquiring business and enables more than 40% of point-of-sale transactions and half of online transactions. Bank of Baroda, which is India’s third largest lender by assets, brings along with it reach, scale and a large customer base.ET had recently reported that the Tata Group had initiated talks with the central bank to set up a similar platform. Other entities interested in setting up an NUE, as reported by ET, include Reliance Jio, BSE, NSE, Paytm and Infibeam.The framework for the NUE was released in August, with the central bank also opening the window for applications. Entities receiving approval can set up a payments company for owning and operating a pan-India digital payments network, exercising the same powers as NPCI.The RBI has not yet made clear the specific mandate of the proposed NUEs that will be established in the new licence regime. The broad scope for operations as expressed by the RBI include setting up and operating new payment systems comprising ATM networks, point-of-sale services, Aadhaar-based payments and remittances.The central RBI has set February 2021 as the deadline for the interested entities to submit applications. An external central bank committee will scrutinise the applications over another six months.

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