The Reserve Bank of India (RBI) has reportedly proposed to establish an alternative digital retail payments system to prevent the National Payments Corporation of India Limited (NPCI) from dominating the current system.
According to the RBI, the new payments system is aimed at managing the retail space and will operate clearing and settlement systems. In the same line, the new alternative retail payments systems will be able to recognise the risks involved in credit, settlement and liquidity and manage them appropriately.
RBI has reportedly released a set of draft norms on the new system. Earlier, the Central Bank had established the NPCI in a move to develop and manage different online payment systems in the retail space.
However, the NPCI began to pick up pace in such a manner that the payments system dominated the retail space, creating a monopoly. With the NPCI becoming too big a system to fail, the RBI decided to establish an alternative digital payments system to manage and operate retail payments.
According to the draft guidelines released by the RBI, the new system can be utilised by both for-profit and not-for-profit entities.
Also, the new entity shall include a board committee to ensure transparency and see to that the corporate governance principles are met accordingly. However, the right to nominate and appoint the board of directors on such new umbrella entities will be retained by RBI.
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