The Hindu Business Line : Payment corporation to be set up by January 1

The core group set up by Indian Banks' Association to work out the details of the formation of the new entity met on Wednesday to discuss various issues, including the draft articles of association of the new company.

The entity will be incorporated as a Section 25 company with an initial paid-up capital of Rs 100 crore. About 20 banks will join initially as equity holders, but no bank will hold more than 10 per cent of the stake, said an official associated with the formation of the new organisation.

The banks include SBI, ICICI Bank, Citibank, Union Bank of India, Bank of Baroda and HSBC.

The functions of the existing clearing houses owned by the RBI and SBI and other banks will be transferred to the new company. Once the new company starts functioning, the RBI will focus only on regulatory issues. The employees currently working in the existing clearing houses will be taken on deputation by the new company, the official said.

The formation of a separate umbrella organisation for payment and settlement system was based on the recommendation of expert committee set up by the RBI.

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