Yes Bank is in talks with the newly-founded So Hum Bharat Digital Payments for a 9.99% equity stake in a proposed new umbrella entity (NUE) for retail payments. So Hum and Yes Bank will jointly work towards the NUE’s product and business strategy, the former said in a statement on Tuesday.
Promoter Infibeam Avenues has picked up a 33.33% stake in So Hum, founded by Navin Surya, chairman-emeritus, Payments Council of India (PCI). Surya said Yes Bank has a fintech-first strategy, much like that of So Hum. So Hum is in discussions with multiple fintech partners to work on and co-create new and innovative payment products and solutions for multiple use cases and for rendering its services to the masses, a statement said. “This would help us grow digital payments consumers from 100 million to 500 million and also drive digital consumer spends from 18% to 50% in the economy,” it added.
The Reserve Bank of India (RBI) had released the final framework for authorisation of NUE for retail payments on August 18, following the draft released on February 10. The guidelines demand that applicants have at least three years of experience in the payments space and a minimum paid-up capital of Rs 500 crore.
At present, only National Payments Corporation of India (NPCI), a not-for-profit company, performs this role. The NUE could choose to be a for-profit entity or a not-for-profit as defined under Section 8 of the Companies Act. The systems that it develops will be expected to interact and be interoperable, to the extent possible, with the systems operated by NPCI.
No single promoter shall have more than 40% investment in the capital of the NUE. They shall upfront demonstrate capital contribution of not less than 10% at the time of making an application for setting up of the umbrella entity. The balance capital shall be secured at the time of commencement of business. The promoter shareholding can be diluted to a minimum of 25% after five years of the commencement of business of the umbrella entity. A minimum net-worth of Rs 300 crore shall be maintained at all times.
Applications for setting up an NUE must reach the RBI by February 26. Major players in the digital payments ecosystem, such as State Bank of India (SBI), HDFC Bank, Paytm and Jio are likely to send in applications. Surya said, “We at So Hum are proud to partner with Yes Bank and the combined expertise of the two firms will add significant value to this NUE venture through continuous innovation and disruption.”