As a part of its plan, the RBI had provided details on who could bid for licenses and set up operating parameters; it had already received bids from six payment consortiums. The Reserve Bank of India (RBI) has put on hold its plan to invite proposals for new digital payment platforms citing data security concerns, according to a LiveMint report. The RBI's plan permitted private entities to obtain New Umbrella Entity (NUE) licenses to create platforms that supplemented and competed with the systems of the National Payments Corporation of India (NPCI). Digital payments in India have grown exponentially in the last few years as smartphones and mobile data plans became cheap. Credit Suisse revealed that digital payments constituted 30% of all retail transactions in India till March 2021 up from 10% in 2018. The growing size of payments caused the RBI to express concern that financial stability and efficiency are at risk due to the concentration of various critical payment systems with a single operator. NPCI processed over Rs 128 lakh crore worth of financial transactions in 2020-2021 alone. The central bank, in its January 2019 paper, opined that there was a need to promote competition following which it came up with the NUE scheme. Why did the RBI pull the plug on the NUE scheme? The Mint report put forth several factors that may have led to RBI’s decision such as: The issue of data security vis-á-vis foreign entities compelled RBI to not provide new licenses. Mastercard's non-compliance with local…
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