Payment Systems in India: The Case for an Independent Regulator

About the author: Rashi Sharma is a 4th Year law student at the National Law Institute University, Bhopal. Her research interests are financial technology, insolvency law and competition law.


In August 2020 when the Reserve Bank of India released the framework for a pan-India umbrella entity to allow private for-profit companies to own and operate retail payment systems across the nation, it attempted to encourage a more competitive, innovative and inclusive retail and digital payment sector in the country. As retail and digital payments in India grow, particularly accelerated by the pandemic, the central bank has sought to subdue the over-dependence on the National Payment Corporation of India (NPCI) as the single retail payment system operator in the country. The new framework envisages a model wherein one or more New Umbrella Entities (NUEs) will be authorized to own and operate individual retail payment systems. With the deadline for completing the application process for the authorization of an NUE (31 March 2021) around the corner, this article will outline the steps which the central bank could take to further its objective of having a diverse and evolving retail and digital payment systems sector in the country.

NPCI under the new framework