NPCI A Public Body? CIC Asks Again if UPI Is A Monopoly; MD Denies

57 percent of NPCI’s shares are held by public sector banks.

NPCI MD & CEO, Dilip Asbe, on 27 November , told a bench of Central Information Commission that UPI is not a monopoly. 

(Photo: Kamran Akhter/The Quint)

The Central Information Commission, 45 days after concluding all hearings pertaining to the question of whether the National Payments Corporation of India (NPCI) should come within the ambit of the RTI as a public authority, conducted a surprise hearing on Wednesday, 27 November.

The CIC, the highest appellate authority pertaining to the Right to Information (RTI), had conducted its seventh and final hearing on 9 October and a judgment was awaited within the first week of November.

However, 49 days after the final hearing, the two-judge bench decided to summon the appellant and NPCI once again before passing a judgment on whether the BHIM, RuPay owning organisation should come under the ambit of the RTI. The Quint was present at the hearing which was attended by NPCI CEO and Managing Director, Dilip Asbe.

A bench of information officers Neeraj Gupta and Suresh Chandra, told the appellant that they wanted to hear more about the legal aspects of why NPCI is a monopoly and should be considered an instrument of the state.

The CIC, in an order on 18 July, had declared that the complaint regarding NPCI brought before it “involves a substantial question of law”.

The question before the CIC is “whether National Payments Corporation of India (NPCI) is a public authority and whether the information sought is required to be disclosed,” under the RTI Act, the order stated.

In October 2019, NPCI’s prodcut, UPI had recorded 1,148 million transactions worth Rs 1.91 lakh crore.

According to NPCI, Unified Payments Interface (UPI) is a system “that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.”

UPI Not a Monopoly: MD, Dilip Asbe

NPCI’s MD, Dilip Asbe, argued about the nature of the company, why its product UPI should not be viewed as a monopoly and why it should not be viewed as a public authority.

UPI is a system invented by the NPCI. NPCI went to the RBI and obtained a licenCe. UPI directly competes with IMPS. If a customer doesn’t want to use UPI he can do that.

Dilip Asbe, Managing Director, NPCI

Adding a point about innovation in payment technology, Asbe said, “UPI was an innovation by NPCI”. He went on to add, “the way technology is progressing, tomorrow there might be another innovation.”

Asbe was also present at the previous hearing on 8 October. He was accompanied then by NPCI’s Chief Financial Officer (CFO), Sanjay Saxena. At the previous hearing as well, Asbe had defended NPCI against the appeal that it was owned, controlled or substantially financed by the government and its products enjoyed a monopoly.

“UPI is not a monopoly,” he had told the bench of information commissioners.

He had iterated that that UPI “competes with several other platforms” and “no regulatory functions of the RBI have been taken on” by NPCI.

CIC: Is NPCI An Instrument Of the State?

The hearing on 27 November centered around two related questions – is the NPCI a monopoly and is it an instrument of the state?

On the point of instrumentality, the appellant’s counsel argued on two points:

• A body corporate is an instrumentality of the state when its primary function is to execute a public function desired by the state.

• If the state, in the absence of a statute or enabling legislation, empowers an authority to perform a public function.

Using the National Stock Exchange (NSE) example, the counsel argued that “just as NSE is performing a public function through the trading of securities, so is the NPCI in the exchange of transactions.”

NPCI is handling public funds. It is handling your Lordship’s money, my money and the public’s money and requires regulatory oversight,” the counsel added.

Why the Confusion Over NPCI?

Questions on NPCI’s nature – whether it is public or private – have been raised several times since its inception in 2009. Even though it has been audited by the CAG and promoted by Prime Minister Narendra Modi, the corporation maintains that it is not a public entity.

The contention arises from the fact that while it is incorporated as a non-profit organisation, 57 percent of its shares are held by public sector banks.

A majority of its board members are from public sector banks, and its products, like the BHIM app, receive funding and promotion from the government.

The NPCI describes itself as “an umbrella organisation for operating retail payments and settlement systems in India”.

It was set up as “an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.”