India $5 Trillion Economy

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NPCI Diversifies Shareholding with new Partners such as Paytm, PhonePe, Amazon Pay

  • Currently, traditional banks such as the SBI, Union Bank of India, Punjab National Bank, Canara Bank, etc own are the majority stakeholders.
  • Digital players that have acquired a stake in NPCI include Paytm Bank, One Mobikwik, Amazon Pay, PhonePe Private, and Pine Labs.
  • Earlier this month, Facebook-owned WhatsApp got the nod to roll out its UPI payments service to its 400-million strong user base.

The National Payments Corporation of India (NPCI) announced the raising of nearly Rs 82 Crore by way of a private placement of 4.63% of its equity shares to 19 new banks, non-banking entities, and the parent companies of payment systems aggregators.

Of the 131 Reserve Bank of India (RBI) regulated entities that have been offered the private placement, 19 showed interest and were allotted shares in NPCI. The total shareholder entities for NPCI now stands at 67.

Currently, traditional banks such as the State Bank of India, Union Bank of India, Punjab National Bank, Canara Bank, HDFC Bank, and ICICI Bank own more than 40% stake in NPCI and remain the bigger players for now.

The new shareholders include the older players such as Standard Chartered Bank, Dhanlaxmi Bank, and IDFC First Bank. Suryoday Small Finance Bank and Capital Small Finance Bank are also in the expanded list of NPCI.

The new digital players that have acquired stake include Paytm Payments Bank, One Mobikwik Systems PrivateAmazon Pay Indian PrivatePhonePe Private, and Pine Labs.

Each of the above entities will hold a maximum equity stake of 0.57% in the NPCI and post the allotment of this equity stake, banks and financial institutions will own a 78.32% stake in the entity, the filings said.

This move of NPCI came a week after the total number of transactions on the UPI platform had crossed 2 billion a month in October. Importantly, the transaction volume grew faster during the Covid and lockdown phases as people seemingly tried to avoid the use of cash that helped digital payments jump.

Analyzing the NPCI data showed that it took only eight months for volume to grow by 746 million from 1.3 billion transactions in February to 2.07 billion in October. The number of banks that live on UPI also grew from 141 in October 2019 to 189 in October 2020.

Earlier this month, even Facebook-owned WhatsApp got the nod to roll out its UPI payments service to its 400-million strong user base, the NPCI issued a directive asking third party UPI providers to cap the total number of transactions on their platform to 30% of the total volume of transactions.

About NPCI: NPCI is a not-for-profit organization and an initiative of the RBI and Indian Banks’ Association (IBA). The company currently operates various payment infrastructure including – Unified Payments Interface (UPI), Aadhaar Enabled Payment System (AePS), Bharat BillPay, amongst others.

In August, NPCI also launched its international arm– NPCI International Payments Ltd — to expand real-time payment system UPI and card payment network RuPay in other countries.

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