New Umbrella Entity (NUE)

New Umbrella Entity (NUE)

The NPCI has been promoting and managing digital transaction platforms in India since 2008 and is backed by more than 50 retail banks. They have, over the years, introduced payment channels like RuPay, Bharat Bill Pay, IMPS, and many others. However, due to the exponential rise in internet traffic and subsequently, frauds and cyberattacks, it has become difficult for NPCI to manage everything on their own. Therefore, in an attempt to address this ‘risk concentration’, the RBI in 2020 invited private companies to set up a new platform – New Umbrella Entity (NUE). The idea behind this initiative was to reduce the dependence on NPCI and create an alternate mechanism for digital payments for the country.

As per the RBI, NUE is a non-profit entity that will be formed and incorporated in India under the Companies Act, 2013. It can also be a ‘for-profit’ or a company under Section 8.

In addition to reducing the concentration of cyber risks, sharing responsibilities between the NPCI and NUEs will pave the way for an improved digital payments ecosystem. It will also lead to healthy competitiveness, which in turn will ensure better and effective products and services. The future of the payment system will be more interoperable.

Let’s take a detailed look at the activities and the framework of NUEs, as per RBI guidelines.

Scope of activities:

  1. Set-up, manage and operate new payment system(s) especially in the retail space comprising of, but not limited to, ATMs, White Label PoS; Aadhaar based payments and remittance services; develop new payment methods, standards and technologies; monitor related issues in the country and internationally; take care of developmental objectives like enhancement of awareness about the payment systems.
  2. Operate clearing and settlement systems; identify and manage relevant risks such as settlement, credit, liquidity and operational and preserve the integrity of the system(s); monitor retail payment system developments and related issues in the country and internationally to avoid shocks, frauds and contagions that may adversely affect the system(s) and/or the economy in general.
  3. Fulfil its policy objectives and ensure that principles of fairness, equity and competitive neutrality are applied in determining participation in the system; frame necessary rules and the related processes to ensure that the system is safe and sound and that payments are exchanged efficiently.
  4. Carry on any other business as suitable to further strengthen the retail payments ecosystem in the country.


    • Owned and Controlled by Residents: The promoter or the promoter group for the NUE should be ‘owned and controlled by residents’ with 3 years’ experience in the payments ecosystem.
    • The shareholding pattern should be diversified. Any entity holding more than 25% of the paid-up capital of the NUE will be deemed to be a promoter.
    • Capital: The umbrella entity shall have a minimum paid-up capital of Rs. 500 crore.
    • No single promoter or promoter group should have more than 40% investment in the capital of the entity.
    • A minimum net worth of Rs. 300 crore should be maintained at all times.
    • Governance Structure: The NUE should conform to the norms of corporate governance along with ‘fit and proper’ criteria for persons to be appointed on its board.
    • The RBI retains the right to approve the appointment of directors as also to nominate a member on the board of the NUE.


As of May 2021, four consortiums have submitted applications for the National Umbrella Entity (NUE) licenses, which will allow firms to build a real-time payment platform for India. These consortiums include companies such as Silicon Valley giants Facebook and Google, and India’s largest businesses like Reliance Industries, Tata Group, HDFC Bank, and ICICI Bank.

With the introduction of NUEs, there will be a plethora of payment options for consumers, due to competition. India aims to become a cashless economy and NUEs are a great step towards that goal. It also ensures that the digital payments arena will expand and be more financially inclusive by reaching far and wide into India’s unbanked areas. This is a great opportunity for financial inclusion in the country!