Indian Central Bank Halts ‘New Umbrella Entity’ Project Intended to Rival UPIby Fintech News Singapore April 11, 2023
The Reserve Bank of India (RBI) has halted plans for the pan-India New Umbrella Entity (NUE) for retail payment systems that was meant to rival that of the United Payments Interface (UPI).
The Indian central bank had opened up bids for licenses to operate new retail payment and settlement systems across India through the NUE project. Amazon, Reliance, Facebook, Tata Group, Google, HDFC and ICICI were among the license applicants.
The Economic Times quoted the Deputy Governor T Rabi Sankar saying,
“Of the proposals that we have received, we did not quite see any innovative or infrastructural solution that had come up. We wanted to bring in new ideas.
We did not want something which is either incremental or a substitute of existing ideas or technologies.”
UPI is a payment system that allows users to link more than one bank account in a single smartphone app and make fund transfers without having to provide IFSC code or account number. This allows funds to be credited instantly on a real-time basis.
As UPI now processes over 8 billion transactions a month, RBI was seeking for an alternative to mitigate any concentration risk as UPI continues to grow exponentially.
There are three ways to make a UPI payment; (1) link one’s bank account to a UPI app and scan a QR code; (2) reload a prepaid wallet such as Paytm or Amazon and use that to scan a QR code when user wants to make a payment; or (3) link Rupay Credit card from certain banks and pay on credit.
Just last week, RBI said that it intends to expand the scope of the payment system from these three methods to now enable pre-sanctioned credit lines at banks through UPI which is similar to a credit card.
Extending its scope beyond just domestic payments, RBI and the Monetary Authority of Singapore had announced that the payment linkage of UPI with the island state’s PayNow had gone live in February.