The Hindu Business Line : Payment Corpn faces further delay

The Reserve Bank of India's plan to transfer the work related to payments and settlements to a separate company — National Payments Corporation of India (NPCI) — is in for further delay.

The apex bank is understood to have told Indian Banks Association (IBA) to go slow on the formation of NPCI, whose promoters are banks.

IBA has already initiated the process of registration of NPCI as a Section 25 company — which does not allow sharing of profit — with an authorised capital of Rs 300 crore. Nine banks have agreed to pick up equity and contribute to the paid-up capital of Rs 100 crore.

The clearing house operations are at present carried out by the RBI, State Bank of India and a few other banks. The proposal is to transfer these functions to NPCI and the RBI will focus on regulatory issues.

The RBI's advice to IBA apparently follows protest from the RBI employees union, which fears job losses. The United Forum of Reserve Bank Officers and Employees had opposed outsourcing of clearing house activities.

The Minister of State for Finance had recently clarified that even after the setting up of NPCI, the settlement transactions will continue to remain with RBI, which would continue to regulate and supervise the payment and settlement system.

Answering a question in the Lok Sabha, Mr Pawan Kumar Bansal, said: "There is no proposal to outsource or transfer the work of the National Clearing Cell as the same will be carried out by the staff of RBI, as hitherto, who will be on deputation with NPCI."

The question was whether RBI unions had "strongly opposed the outsourcing of RBI jobs, viz, transfer of clearing operation to private parties." According to bankers, since the unions are against the setting up of NPCI, and it has political implications, the RBI might have decided not to proceed with the proposal in a hurry.

According to RBI's plans, NPCI was supposed to have started operations from April 2006.

The registration of NCPI is itself faced with a hitch, the Registrar of Companies having held up its application on technical grounds. The mandatory advertisement given in the newspapers on the incorporation of NPCI did not have the full address of the office of the ROC, though the ad stated that any objection to the proposed company should be sent to the ROC. ROC is understood to have told the promoters of NPCI to issue a fresh ad containing the full address of the Mumbai regional office of the ROC.

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