Why in news?
- Six groupings, which included Facebook, Google, Amazon, Flipkart and others, had applied for NUE licences and all of them have fallen short of the RBI's expectations.
What is New Umbrella Entity (NUE)?
- As envisaged by the RBI, an NUE will be a non-profit entity that will set up, manage and operate new payment systems, especially in the retail space such as ATMs, white-label PoS; Aadhaar-based payments and remittance services.
- The entity formed shall be a company incorporated in India under the Companies Act, 2013. Currently, the umbrella entity for providing retail payments systems is NPCI, which is a non-profit entity, owned by banks.
- Promoters: A promoter will hold at least 25% and up to 40% of the operator. Only those entities that are owned and controlled by Indian citizens with at least three years of experience in the payments segment can become promoters of NUEs.
- Foreign investment: Foreign companies can own a maximum of 25%, so are teaming up with local players.
- Capital required: According to the RBI guidelines, the entity will have minimum paid-up capital of Rs 500 crore, with no single promoter group holding over 40 per cent investment in the capital.
- Governance structure: The new entity will have to abide by corporate governance norms and the ‘fit and proper’ criteria for persons to be appointed to the board.
Q1) What is Aadhar?
Aadhaar is a 12 digit individual identification number issued by the Unique Identification Authority of India on behalf of the Government of India.The number serves as a proof of identity and address, anywhere in India.