Understanding New Umbrella Entities (NUEs) in India’s Digital Payment Landscape


In recent years, cashless payments have gained immense popularity in India, especially with the widespread adoption of Unified Payments Interface (UPI).

However, concerns about the concentration of payment systems led the Reserve Bank of India (RBI) to introduce New Umbrella Entities (NUEs) to foster innovation and competition in the retail payment space.

Current Payment Landscape:

Currently, the National Payments Council of India (NPCI) manages various payment systems, including UPI and RuPay. However, the RBI recognized the need for diversification to mitigate systemic risks and enhance innovation.

What are NUEs and Their Benefits?

NUEs are for-profit entities authorized by the RBI to manage and operate retail payment systems. Unlike NPCI, NUEs can charge fees for transactions and earn interest from customer balances.

Their benefits include fostering innovation, offering new payment solutions, and expanding the competitive landscape.

Who Can Apply for NUEs?

Entities with at least three years of experience in the payment ecosystem can apply for NUE licenses. Promoters must be Indian residents, and foreign entities must comply with FDI regulations.

Additionally, applicants must meet RBI’s fit and proper criteria and capital requirements.

Capital Requirements and Governance Structure:

At the time of application, entities must have a minimum paid-up capital of INR 500 crore, with promoters contributing at least 10%.

The promoter’s shareholding can be diluted to 25% after five years. The RBI retains the right to approve directors and nominate a member of the board.

Application Process and Recent Developments:

An External Advisory Committee (EAC) scrutinizes applications, and the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) issues authorizations.

Six groups, including consortia led by Amazon, Reliance Industries, and Paytm, applied for NUE licenses. However, the RBI has put licensing on hold, citing the lack of innovative proposals.

NUEs vs. NPCI:

NUEs will complement NPCI rather than replace it. The RBI’s decision to allow fintechs and payment companies to process NEFT and RTGS payments indicates support for NUEs’ success.


NUEs represent a significant step towards diversifying India’s payment ecosystem and promoting innovation. While their introduction faces challenges, they have the potential to enhance competition, improve customer service, and drive financial inclusion.

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