Is the National Payments Corporation of India (NPCI) a public authority?
Should the NPCI, which runs the government backed BHIM app, come under the ambit of the RTI?
These are questions that the Central Information Commission (CIC) will be adjudicating on. Information Commissioner Sudhir Bhargava started hearing a petition on Thursday, 1 November, that contends whether the NPCI should come under the RTI as it is a ‘public authority’ as defined by the Right to Information Act, 2005.
Questions about the NPCI’s nature has come up several times since its inception in 2009. The contention arises from the fact that while it is incorporated as a non-profit organisation, its majority 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, receives funding and promotion from the government.
Why the Confusion?
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”.
The organisation has been established as a non-profit under Section 25 of the Companies Act (now Section 8 of Companies Act 2013) ‘considering the utility nature of the objects of NPCI,’ the official website cites.
However, petitioner Neeraj Sharma has challenged this characterisation of the organisation. He contends that that the government wields considerable influence over the NPCI by virtue of how it is owned, controlled and funded.
The organisation was promoted by 10 major banks from the public and private sector - State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC. The shareholding pattern was broad-based to include 56 banks in 2016.
“The recent dissent by Department of Financial Services (DFS) to the Payments and Settlements Bill, 2018, urged 51 percent of direct holding of the NPCI by Government, implying a section of Government/bureaucracy’s interest in taking back the control of critical infrastructure company back from private ownership of banks.”Srikanth Lakshmanan, part of Cashless Consumer, a consumer collective tracking digital payments
The Case at Hand
Tha applicant in the case, Neeraj Sharma, had filed an RTI query on 10 December, 2016, seeking information pertaining to the Chief Public Information Officer and First Appellate Authority details of NPCI.
Failing to elicit a response, the next step in the RTI process was to file a first appeal under Section 19 of the Right to Information Act, seeking the information of the same.
Sharma’s submission before the Chief Information Commissioner mentions that he was ‘aggrieved by the order of the first appellate authority” and filed a complaint to the Chief Information Commissioner.
On Thursday, Sharma had appeared before the Commissioner along with his brother, Pulkit Verma, who was representing him in the case. On behalf of the NPCI, while the Chief Public Information Officer was summoned, an officer from a different department had appeared. The hearing, after initial submission of the appellant, was adjourned for a later date.
“The Government of India wants to interfere in the functioning of the NPCI and at the same time it doesn’t want it to be accountable to the citizens irrespective of the fact that NPCI clearly performs a public function of routing subsidies of states.”Neeraj Sharma
This case has a precedent in January 2015 when a similar query had appeared before the CIC. The complainant from Mumbai had appealed to the CIC after an RTI seeking information on six points relating to LPG subsidy provided directly to the consumers by the Oil Companies through AADHAR enabled bank accounts of beneficiaries had failed to elicit a response.
In that case the Information Commissioner had ruled that ‘the NPCI is associated with the scheme as a system provider and not as stake holder. The information sought for by the complainant did not fall within the domain of the NPCI.’
Conflicts of Interest ?
Apart from being owned entirely by banks, the NPCI has also come under fire from fintech wallet companies such as PayTM and PhonePe regarding issues of ‘neutrality’.
A Times of India report said in 2017, 74.5 percent of the shareholding is by the 10 promoter banks. However, 58 percent of the shares are held by PSU banks.
The same report claimed that at a NITI Ayog meet in 2017, payment industry leaders like Paytm’s Vijay Shekhar Sharma and PhonePe’s Sameer Nigam had questioned the NPCI’s move to allocate the government outlay of Rs 495 towards the BHIM app instead of offering it to all apps. They had urged Prime Minister Narendra Modi to ensure the neutrality of NPCI.
The Ratan Watal Committee report in 2017, in its recommendations, had urged the RBI to issue regulations to move towards diffused shareholding where no individual shareholder along with persons acting in concert can hold more than 5 percent of the equity share capital. These recommendations are yet to acted upon.
“There is a need for improved transparency provisions to the organisations that operate critic public infrastructure such as the Direct Benefits Transfer enabling Aadhaar Payments Bridge. Irrespective of percentage of ownership by the government, the entity has to be under RTI,” said Srikanth.
The Issue with BHIM App
BHIM, a privately-owned application, is managed and operated by the NPCI, a private entity. It has, however, received wide promotion and funding by the government. Finance Minister Arun Jaitley, in his budget speech in 2017, had also announced schemes for the app.
In the 2018-2019 Budget, Jaitley, announced an outlay of Rs 595 crore for the digital payments sector. BHIM has an allotted outlay of Rs 495 crore. However, one is unable to seek answers to questions such as how it uses financial data of users, how many users it has, how many downloads BHIM has or how much has spent by the government to promote the app. This is because the NPCI, as a private entity, is outside the ambit of the RTI.
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