Paytm and Ola Partners with IndusInd Bank to Apply for NUE License, says report

  • Recently, Amazon had reportedly partnered with ICICI Bank, Axis Bank, among others to apply for an NUE license to RBI.
  • The last date to apply for the NUE license has been extended to March 31, 2021.
  • Besides these, Reliance Jio, Tata Group, and Infibeam Avenues also reportedly in the race for NUE license.

Unicorn startups Paytm and Ola have reportedly partnered with private sector bank IndusInd Bank to apply for a New Umbrella Entity (NUE) license to the Reserve Bank of India (RBI).

According to the reports, The Reserve Bank of India has extended the last date for application submission from February 26 to March 31, 2021.

If the application gets accepted, the consortium will receive an NUE license which would allow them to set up digital payments systems similar to the NPCI’s Unified Payments Interface (UPI).

The announcement comes just after a day when ecommerce giant Amazon reportedly partnered with Axis Bank, ICICI Bank, Visa, Pine Labs, and Billdesk to apply for an NUE license to set up their own national payments network.

Others expected to be part of the group include Zeta Pay, Electronic Payment Services (EPS), and Centrum Finance, with Paytm likely to “play a leading role” and Ola and IndusInd also having “significant stakes,” ET reported.

“India’s digital payments boom requires robust multiple payment products for the next level of growth,” the report added.

Apart from these, private players including Reliance Jio Infocomm, Tata Group, Infobeam Avenues, and private banks, including State Bank of India, ICICI Bank, HDFC Bank, Bank of Baroda, Axis Bank, Kotak Mahindra Bank, and Yes Bank, also reportedly in the race to apply for NUE license.

In mid-August 2020, The Reserve Bank of India had released the framework for the authorization of a pan-India umbrella entity for retail payments and had invited applications from interested entities. “Such an entity shall be a Company incorporated in India under the Companies Act, 2013.”

At that time, RBI guided that applicants should have at least three years of industry experience and a minimum paid-up capital of Rs 500 crore.

According to the statement by RBI, No single promoter should have more than 40% investment in the capital of the umbrella entity. Also, the promoter shall upfront demonstrate the capital contribution of not less than 10% i.e, Rs 50 crore at the time of applying for the application.

The umbrella entities shall conform to the norms of corporate governance along with ‘fit and proper’ criteria for persons to be appointed on its Board. The Reserve Bank retains the right to approve the appointment of Directors as also to nominate a member on the Board of the umbrella entity, it said.

The balance capital shall be secured at the time of commencement of business/operations. The Promoter shareholding can be diluted to a minimum of 25% after 5 years of the commencement of business of the umbrella entity. A minimum net-worth of Rs 300 crore shall be maintained at all times, the statement added.

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