The Hindu Business Line : 5 PSBs to have majority stake in Payments Corp

Mumbai, Dec. 7 Five public sector banks--State Bank of India, Canara Bank, Punjab National Bank, Bank of Baroda and Union Bank of India--will have the majority stake in a new company to be incorporated to undertake the payment and settlement work, currently being done by Reserve Bank of India.

An official associated with the formation of the company said initially the company, to be incorporated under Section 25 of the Companies Act, will have nine shareholders–five PSU banks, two private and two foreign banks.

The non-PSU banks are likely to be ICICI Bank, HDFC Bank, Standard Chartered and HSBC. Other banks may also be allowed to be shareholders in the company at a later stage, the official said.

With Lok Sabha passing the Payment and Settlements System Bill last week, banks can now go ahead and set up the company, the official said.

Initially, the proposed company—National Payments Corporation of India—will take over the RBI-run clearing houses in the four metros—Mumbai, Delhi Chennai, and Kolkata.

The employees of these clearing houses will also be transferred on deputation to the new company. Eventually, all the retail payment systems will be run by NPCI, the offcials said.

IBA initiative

Indian Banks’ Association, apex body of bankers, is taking the initiative in getting the company incorporated. IBA had started the process a year ago, but had to suspend it following the delay in passing the Bill, which was referred to a standing committee. At one stage, RBI employees unions had protested against the move to privatise the payment and settlement activities, forcing bankers to defer the proposal to set up the company.

The official clarified that though the RBI will be transferring the assets to the new company, no employee will lose job. They will be on deputation to the new company and will be free to go back to the RBI once they finished their term.

Around 250 employees are working for the payment and settlement system.

The Bill empowers the RBI to regulate and supervise all the payment and settlements systems in the country including ATMs, credit and smart cards.

Operations of credit card issuing companies in India will also come under direct scrutiny of RBI.