Stakeholders advised RBI against allowing foreign control of NPCI-like entity: Report
The RBI's proposed umbrella entity for retail payments is "expected to interact and be interoperable, to the extent possible, with the systems operated by NPCI".
September 30, 2020 / 01:50 PM IST
Stakeholders had expressed concerns over indirect foreign ownership of the proposed umbrella entity for retail payments, before the framework was released by the Reserve Bank of India (RBI).
Foreign ownership of the entity was an issue raised by stakeholders in their comments on the draft guidelines, Mint reported citing documents obtained through a Right to Information (RTI) request.
Moneycontrol could not independently verify the story.
Also read: RBI releases framework for umbrella entity for retail payments
The central bank had in August proposed a framework for a pan-India umbrella entity for retail payments, which is similar to the National Payments Corporation of India (NPCI).
Any foreign investment in the company will need approval from the relevant authorities, as specified under the Foreign Exchange Management Act, 1999 (FEMA).
The payments system is "expected to interact and be interoperable, to the extent possible, with the systems operated by NPCI," RBI said in a notification.
"All entities eligible to apply as promoter / promoter group of the umbrella entity shall be owned and controlled by resident Indian citizens," the central bank added.
Some stakeholders recommended restricting foreign ownership at 25 percent, and some believed that allowing such entities to run India's payment systems could hurt national interests, Mint reported.
"These foreign-funded companies, if they participate in setting up the umbrella entity, would lead to passing off control to foreign entities indirectly. Although it won't be a direct control, there will be significant influence of funding giants like SoftBank, Tiger Global and alike which could prove detrimental to the interest of the public at large," one comment said, as quoted by the paper.