The State Bank of India (SBI) is planning to foray into the digital payments landscape, by establishing an entity to rival National Payments Corporation of India (NPCI).
NPCI currently manages over 60% of the retail payments volumes via Unified Payments Interface (UPI), Immediate Payment System (IPS) and National Financial Switch (NFS).
The Indian government-owned lender intends to enter the country’s fastest growing digital payments ecosystem as a primary stakeholder, the Economic Times (ET) reported.
The bank’s senior management is currently “examining” the possibility of obtaining a licence under the Reserve Bank of India’s (RBI’s) New Umbrella Entity (NUE) framework.
The discussions are currently at a preliminary stage, the report added.
A spokesperson for SBI said: “The framework is also being examined by SBI, as the presence of an additional entity may lead to further deepening of the digital retail payments ecosystem.
“This will further increase the reach and expanse of financial inclusion, since many more innovative and affordable products will be made available on this platform.”
RBI – the country’s central bank – released the NUE framework last week, along with the application window.
Approved entities can set up a payments company to operate a pan-India digital payments network, with powers equivalent to the NPCI.
One of the ways to create a new payments unit is through a combined ownership-based model, ET said citing people aware of the matter.
Under this model, SBI, as a promoter, can invite other state-run lenders to form a consortium.
The government-backed lender can also team up with fintech firms to offer its digital initiatives via banking channel.
According to RBI guidelines, SBI will need to pay INR5bn ($67.68m) in paid-up capital in case the digital payments unit receives a go-ahead.