Reliance Industries is set to team up with Facebook Inc., Google, and Infibeam Avenues Ltd in an effort to step into the digital payments business. The company plans to seek a license from the Reserve Bank of India.
The central bank, in 2020, had invited companies to forge a new umbrella entities (NUEs) to create a payments network that would rival the system operated by the National Payments Council of India (NPCI), as it seeks to reduce concentration risks in the space.
According to various reports, the NPCI is a non-profit company, which as of March 2019 counted dozens of banks as its shareholders, including the State Bank of India, Citibank and HSBC. It processes billions of dollars in payments daily via services that include inter-bank fund transfers, ATM transactions and digital payments.
The RBI has called for applications from those keen to enter India’s digital payments space by March 31 and is expected to study the proposals over the next six months. According to Credit Suisse Group AG, the Indian digital payments market is estimated to touch $1 trillion by 2023. The sector was boosted with Rs 1,500 crore scheme announced by the Finance Minister in the Union Budget 2021-22.
Nirmala Sitharaman acknowledged that there has been a manifold increase in digital payments in recent past. “To give a further boost to digital transactions, I earmark Rs 1,500 crore for a proposed scheme that will provide financial incentive to promote digital modes of payment.”
Reliance Industries set to have its slice from the digital payments cake doesn’t come as a surprise. It already has a stake in India’s largest bank, as per Asia Times, the State Bank of India, via its 30:70 joint venture with Jio Payments Bank. Reliance has enormous resources of the SBI at its disposal. The report states that all of the digital monopolies aligning with Jio compete against one another, but also complement one another. Google is the key player in a host of cloud services for the personal market through its dominance of the search engine and Gmail. It is this space that it uses to get a huge share of digital ad revenues.
Besides its huge telecom infrastructure, Reliance has the ability to bend India’s regulatory structures. As AsiaTimes pointed out, here both Google with its Google Pay and Facebook with its so-called digital money could find a back door into the Indian market using Reliance’s existing financial infrastructure such as Jio Payment Bank.