‘UPI Not A Monopoly, NPCI Not A Public Authority’: CEO Dilip Asbe

CIC was hearing a petition arguing NPCI is a public authority and should come under the ambit of the RTI.

NPCI MD & CEO, Dilip Asbe, on 9 October, told a bench of Central Information Commission that UPI is not a monopoly and that none of RBI’s regulatory functions were delegated to NPCI. 

(Photo: Kamran Akhter/The Quint)

The Central Information Commission, while hearing a case to decide whether the National Payments Corporation of India (NPCI) – owner of BHIM and UPI payment platforms – is a public authority, remarked that “it involves a substantial question of law”.

In effect, the Commision was also exploring if the body should come under the ambit of the Right to Information (RTI) Act.

The “substantial question of law” was to ascertain whether NPCI, whose majority shareholders are public sector banks, is a public authority financed or controlled by the Reserve Bank of India and the government. It is, however, registered as a non-profit.

On Wednesday, 9 October, in the seventh and final hearing in the case, NPCI’s Managing Director, Dilip Asbe, was present for the first time and argued about the nature of the company, its relationship with the RBI and why it should not be viewed as a public authority.

In defending NPCI against an appeal that it was owned, controlled or substantially financed by the government and its products enjoyed a monopoly, Asbe said, “UPI is not a monopoly”. 

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

Asbe was also accompanied by NPCI CFO, Sanjay Saxena. The Quint was present at the hearings. In September 2019, there were 955 million UPI transactions with Rs 1.61 lakh crore being transacted.

In the penultimate hearing, on 28 August, which lasted well over two hours, a division bench of Neeraj Gupta and Suresh Chandra heard arguments on NPCI’s relation to the government.

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.”

What NPCI CEO Told the CIC

After the initial submissions and counter-submissions by the petitioner and NPCI as respondent, the bench asked Asbe to share his views on the contention that the UPI platform enjoys a monopoly.

Asbe, in his response, said: “UPI was innovated upon by the NPCI. If you look at UPI, it is competing with payment wallets, mobile payments systems, tokenised platforms and other platforms.”

“UPI is not a monopoly. We do not agree with the point. We have taken authorisation from RBI to operate UPI as a payment system. Most of our applications are operating in a competitive environment.”

Dilip Asbe, MD & CEO, NPCI

“We are in competition with 90 entities. RuPay is not a monopoly as they claim,” Asbe added.

NPCI’s Relation With RBI

The petitioner, Neeraj Sharma, represented by Nikhil Borwankar and Pulkit Verma, had made a number of arguments outlining RBI’s relation with NPCI to illustrate that it is controlled and financed by the central bank.

The bench also asked Asbe to what extent he agreed with the argument that some of RBI’s functions were delegated to NPCI.

“No regulatory functions of the RBI were taken on by the NPCI,” Asbe remarked.

The appellant's submission, however, contended that, “the control of the Reserve Bank of India is not merely a regulatory control but a pervasive control over the day-to-day policy making by appointing the Key Managerial Personnel of the Respondent Company.”

Sharma told The Quint: “In a reply to an RTI, we found that AP Hota, the chief general manager of the RBI, was deputed by the central bank for two years to the management. Moreover, the RTI also revealed that RBI had provided office space as well as an inventory list of items to NPCI.”

Asbe, responding to this argument made during the previous hearing on 28 August, said: “It is a completely paid out system that had been taken from the RBI.”

NPCI’s counsel, on 28 August, had also said that, “In our case, RBI is nothing more than a regulator.”