RBI postpones new payment network plan to end NPCI’s monopoly

The Reserve Bank of India (RBI) has deferred a plan to allow new entities to create digital payment platforms and end the National Payments Council of India’s (NPCI) monopoly in online transactions. This is because of apprehensions about the security of the data.

At least six consortiums, including Amazon, Google, Facebook and the Tata Group, had applied for licenses for New Umbrella Entities (NUE).

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He had partnered with companies like Reliance Industries after the RBI invited expression of interest last year.

The finance ministry had barred public sector banks such as State Bank of India and Union Bank from applying for licenses as they are shareholders of NPCI.

RBI is of the view that the issue of data security is a major concern for foreign firms and for this reason it has decided not to proceed with the process of granting new licenses for now.

However, this plan of RBI was opposed by the bank unions from the beginning. Apart from this, state-run banks were also upset over not being involved in the process. Bank unions had expressed apprehension over allowing foreign entities to set up payment networks in the country.

Unions like the All India State Bank of India Staff Federation had urged the RBI to scrap the process of licensing and strengthen the NPCI.

The recent ban imposed on Mastercard due to non-compliance with the data localization norms can also be a reason to postpone the process.

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