The mammoth tech-petroleum conglomerate Reliance aims to create its own version of UPI!
According to the latest news, the Mukesh Ambani-led RIL has partnered up with internet giants Google and Facebook to set up a “New Umbrella Entity” aka NUE – a move that will enable them to create a UPI-like payments network and gain a more firm footing in India’s booming digital payments space.
Three people in the know revealed that the NUE will be promoted jointly by a Reliance unit and an Infibeam Avenue subsidiary called – ‘So Hum Bharat’ while both Facebook and Google will also be part of the initiative by holding minority stakes.
Representatives from all four companies have been in talks with the Reserve Bank of India (RBI) over the past few months and now they are in the advanced stages of submitting their proposal to the central bank. The RBI will take another six months to evaluate the submitted proposals along with all other bids.
According to senior industry executives who are aware of the developments, two NUE licenses are up for grabs. Apart from Reliance- led consortium, others that have also applied for the same are – ICICI Bank and Amazon, PayTM in partnership with Indusland Bank, and Tata Group along with HDFC Bank and Kotak Mahindra Bank.
NUE License: More Autonomy In India’s Digital Payments’ Ecosystem
Now, as mentioned earlier, the reason so many consortiums are bidding for an NUE license is due to the fact that it will help gain an entity more autonomy in the processing of digital payments in the country.
As of now, payment services platforms such as GPay and WhatsApp Pay which live on the Unified Payments Interface are classified as intermediaries or third-party entities by Indian laws. With an NUE license, they will upgrade to becoming a licensed payment system operation.
For a U.S.-based giant specifically, having stakes in a licensed NUE holds more importance because it will guarantee them a seat at the table with regulators and policymakers of India who are responsible for overseeing the digital payments landscape of the country. Furthermore, it could also help them escape unnecessary probes and bottlenecks from the GOI.
All in all, the RBI expects the existence of more NUE payments networks to further bolster the growth and adoption of digital payments. According to a study conducted by MeitY aka the Ministry of Electronics and Information Technology, in 2018, the country’s digital economy was valued at a whopping $200 billion – a space that is expected to swell up to 18-23% of 2025 GDP.
Currently, Reliance, Google, and Facebook have not yet commented on this development. However, a spokesperson from Infibeam Avenues said that the company is bound by the confidentiality of the process and thus cannot remark on the same. We will keep you updated on all future developments. Until then, stay tuned.