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RBI to take cues on issuing NUE licences from a committee after hitting pause on programme

By setting up a five-member panel, the RBI may be moving ahead with its NUE programme after all.

A five-member committee will be set up by the Reserve Bank of India (RBI) to study applications, and submit recommendations on new umbrella entity (NUE) licences, the Economic Times reported. RBI Chief General Manager P Vasudevan will lead the five-member committee, the report added. The details of the other four members of the committee are not known yet.  The committee will be tasked with examining many aspects of NUE such as the macroeconomic impact of the scheme and security risks. ET’s sources informed that the committee’s recommendations will be taken into account before licences are issued. The announcement is a significant indicator of RBI’s intention to move ahead with the programme. The central bank’s recent decision to defer the issuance of NUE licences plunged the scheme into uncertainty with no clarity from RBI. The for-profit NUE entities were explored after the RBI became wary of the growing size of payments being concentrated with a single operator — the National Payments Corporation of India. The NPCI processed over Rs. 128 lakh crore worth of financial transactions in 2020-2021 alone.  Why did RBI postpone the programme?  Several reasons were given by the RBI when it decided to shelve the NUE programme, according to a LiveMint report.   Lack of clarity on the security of data vis-á-vis foreign entities Mastercard’s non-compliance with local data storage norms and the subsequent ban on the company from issuing new credit cards.  Data breaches at MobiKwik and BigBasket dented the ability of the private sector to handle threats…

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