RBI Says Central Bank Hasn't Received Innovative Proposals On New Umbrella Entity Plans

The RBI said the NUE's objective was to get some innovations into the digital payments system which is already functioning well with efforts like Unified Payments Interface

In February 2020, the RBI released a draft framework for authorisation for a pan-Indian New Umbrella Entity for retail payment systems.

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RBI's Deputy Governor T Rabi Sankar on Thursday said that the central bank hasn’t received any innovative proposals from the applications for the New Umbrella Entity (NUE), an alternative to the NPCI for competition in the digital payments space. During the post-monitory policy press conference, T Rabi Sankar told reporters, "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."

The deputy governor said the RBI has had a look at the applications, and reminded that the central bank's objective was to get some innovations into the digital payments system which is already functioning well with efforts like Unified Payments Interface (UPI).

In February 2020, the RBI released a draft framework for authorisation for a pan-Indian New Umbrella Entity for retail payment systems.

Governor Shaktikanta Das in 2022 said the central bank NUE was delayed but the plan was still on. Applications had poured in from consortiums of top conglomerates, payments players, and banks.

Six New Umbrella Entity (NUE) hopefuls, including Facebook, Google, and Amazon, had teamed up with local entities, including Axis Bank and ICICI Bank had applied in 2021 for the NUE licence.

Meanwhile, the RBI reiterated that the Indian banking system continues to be sound and healthy. 

However, it added that regulators need to identify potential vulnerabilities and take proactive regulatory and supervisory measures. Institutions should exercise due diligence in risk management, and corporate governance practices; pay close attention to asset-liability mismatches, and build up adequate capital buffers. 

The RBI said it is keeping a close watch on the banking sector turmoil in some developed countries.

Das said that the global economy is now witnessing a renewed phase of turbulence with fresh headwinds from the banking sector turmoil in some advanced economies. Bank failures and contagion risk have brought financial stability issues to the forefront.