“The UPI system was invented by the NPCI, and we took a licence from the RBI to operate it,” said Dilip Asbe, CEO of National Payments Corporation of India (NPCI) at a hearing in the Central Information Commission. “But UPI competes with other mobile banking system, the customer has enough choices to make mobile transactions apart from UPI,” he added.
The Commission was hearing whether the NPCI — which operates BHIM, RuPay, and Aadhaar-based payments systems, among others — is a public authority, and whether it should fall under the ambit of the RTI Act, 2005.
In December 2016, Neeraj Sharma had filed an RTI with the NPCI asking for details of its PIO (Public Information Officer) and Appellate Authority under the RTI Act. After Sharma did not receive any reply, he filed a complaint with the CIC in April 2017. After multiple hearings, the CIC said that the question of whether the NPCI is a public authority and whether the information sought by Sharma should be disclosed “involves a substantial question of law”, CIC formed a division bench of Information Commissioners Neeraj Gupta and Suresh Chandra to hear the case.
The last hearing on October 9 was meant to be the eight and final hearing, and a final judgment was expected. But seven weeks after the last hearing, the Commission called for a surprise hearing on November 27. Information Commissioner Chandra said that the assertion that NPCI was a monopoly and that the state has substantial finance and control over it needed further clarification. Over the last two hearings, Neeraj Sharma had examined NPCI’s relation with the government and submitted that the government has substantial funding and control over NPCI.
Public places faith in NPCI to regulate UPI, Aadhaar payments, argues Sharma
In the November 27 hearing, Asbe once again rejected the proposition that NPCI has monopoly over UPI, stating that technological innovation will ensure competing services for UPI, citing tokenisation payments offered by Samsung Pay. Asbe had made the argument in the last hearing, held on October 9, that UPI is not a monopoly and it competes with payment wallets, mobile payments systems, tokenised platforms and other platforms, as reported by The Quint.
The NPCI was incorporated as a non-profit organisation under Section 25 of the Companies Act, 1956, and describes itself as “an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India”.
Nikhil Borwankar, representing Sharma, said that the NPCI performs what is primarily a public function, which is licensing and regulating a form of mobile payments. An authority or agency is an agency or instrumentality of the state when its primary function is to execute a public function, he said. The public places faith and trust in the NPCI to regulate the services it offers, which is UPI and Aadhaar Payments, he said. Borwankar pointed out that the Supreme Court had found that NSE, which is registered as a cooperative society, falls under the RTI Act, 2005, because it performs a public function that is, trading of securities.
“The NPCI performs an essential public function, and only the NPCI has records of the payment services offered to the public. Where else will I get the records?”
— Nikhil Borwankar
Information Commissioner Neeraj Gupta raised doubt over this, stating that although UPI was created by NPCI, it was offered to all players including Google Pay. “But has RBI said no one else [but the NPCI] can do it?” he asked. Borwankar then cited Aadhaar based Payment System, which is the only entity offering this mode of transaction, “all other operators have coalesced into one entity to operate it,” he said.
NPCI’s counsel Sudip Mullick said that UPI is in direct competition with services from other banks, IMPS is in direct competition with NEFT, and RuPay is in direct competition with MasterCard and others, and thus NPCI is not a monopoly. The state has no substantial financing or control over NPCI, he said.