Small banks want a say in payment body

Smaller banks have raised concerns at big banks taking control of the new retail payments and settlement company National Payments Corporation of India (NPCI).

Sources said participating banks had raised concerns at the Reserve Bank of India (RBI) not being one of the active members in NPCI.

The RBI, through the Indian banks' Association (IBA), is understood to have informed the banks that it will just have a token presence with no operational role.

While the apex bank had earlier made it clear that it would not have any equity participation in NPCI, it had assured banks that it would actively participate as one of the its members.

As per the terms of reference, NPCI should have been designed along the lines of Deposit Insurance and Credit Guarantee Corporation (DICGC), said the sources.

Small member banks are wary of bigger banks with high transaction volumes ultimately controlling the operations of NPCI, side-stepping the smaller ones. These banks are now arguing that it might create problems of safety and security as payment clearing is a sensitive operation, the sources said.

NPCI has been set up as a company under the Companies Act and is owned by private, public and foreign banks, with no bank holding more than 10 per cent stake.

There are over 1,047 clearing houses in the country. The RBI manages 16 clearing houses and the State Bank of India group 1,000.