Of the proposals that we have received, we did not see any innovative or infrastructural solution that had come up: RBI’s T Rabi Sankar
The RBI released the framework for the authorisation of the NUE, which was supposed to compete with the NPCI and reduce the load on UPI, in August 2020
Six conglomerates, including Facebook, Amazon, Google, and Flipkart, had applied for the NUE licence
The Reserve Bank of India’s (RBI) plans for setting up a New Umbrella Entity (NUE) network, which saw tech giants like Facebook and Google applying for licences, is on a standstill due to lack of innovative proposals, deputy governor T Rabi Sankar said during the post-policy press conference on Thursday (April 6).
The development comes three months after a report said that the central bank has put the issuance of licences for the NUE network on hold.
“The objective was to introduce an innovative infrastructural value-added facility into the system because our digital ecosystem is already quite active and innovative, we just wanted to bring in new ideas,” Sankar said responding to a question on the NUE. “We did not want something that is either incremental or a substitute for existing ideas or technologies.”
“Of the proposals that we have received, we did not see any innovative or infrastructural solution that had come up,” he added.
The NUE was supposed to be set up as a separate entity that could reduce risks of overload on the country’s growing Unified Payments Interface (UPI) infrastructure and work as an alternative to the National Payments Corporation of India (NPCI). The NPCI is the umbrella organisation that operates retail payments and settlement systems in India, including UPI.
The framework for the authorisation of the NUE was released by the RBI in August 2020. By early 2021, it started seeing a lot of interest from various private entities. Six conglomerates, including Facebook, Amazon, Google, and Flipkart, had applied for the NUE licence.
While Amazon teamed up with Axis Bank, ICICI Bank, Visa, Pine Labs, and BillDesk; Paytm partnered with the likes of Policybazaar, Ola Financial, and IndusInd Bank for the NUE licence.
In February last year, RBI governor Shaktikanta Das said that while the process of issuing the NUE licence was delayed, the plan was still on.
The latest development comes at a time when digital payments in the country have grown by leaps and bounds over the last few years, thanks to UPI. In March 2023, UPI processed a record 868.5 Cr transactions worth INR 14.1 Lakh Cr.
With the Indian government in talks with multiple countries for accepting UPI payments and allowing cross-border transactions, UPI transactions are set to surge further in the coming times.