SBI may use Yono, SBI Cards’ strengths to take on NPCI

Mumbai: India’s largest lender State Bank of India could leverage its digital banking platform Yono and its credit card subsidiary SBI Cards to set up a rival New Umbrella Entity (NUE) network to compete against the National Payments Corporation of India (NPCI).

While setting up an NUE is currently in the discussion stage, the plan is to leverage its 50,000-plus ATM network and its merchant base of over 10 lakh. The bank is soon expected to complete a cost-benefit analysis, after which it will scout for like-minded partners.

“In any payment system, the State Bank of India is the largest player. We have multiple offerings including one of the largest card issuance businesses in SBI Cards, the largest digital bank Yono…, ” SBI chairman Rajnish Kumar told ET.

ET in its edition on August 27 had reported that SBI is planning to set up an entity to rival NPCI and that the bank’s management had already held multiple discussions to explore the possibility of applying for a licence.

Kumar confirmed the plan and said the discussions are in early stages and any decision to make a formal application could follow only after thorough internal scrutiny. “The discussions are on, and we have to do a cost-benefit analysis and then it will be thrown open for a partnership model.”

The existing scale of SBI’s operations could put any future forays into digital payments business by the state-owned lender in a naturally advantageous position — including the setting up of an NUE, said Kumar.

“…(we have a) massive merchant acquiring business in SBIPSPL, an online marketplace plus we offer multiple services through our largest ATM network. We clearly are present in a lot of payment segments, which we can capitalise along with some partners,” Kumar added.

The plan to set up an NUE could give weight to some of these digital strategies for SBI as the entity, unlike NPCI, can be a for-profit entity as well.

While SBI is a major enabler of digital payments in India, a challenge which needs to be navigated is how the regulator approaches the issue of the bank’s existing shareholding in NPCI if the impending application by SBI gets green light from the RBI.

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