NEW DELHI: With the bank unions up in arms against the move, a Parliamentary panel has advised the Central Government to work out a consensus on the proposal to set up a company for taking over the country's existing retail payment systems.

As per the proposal, a National Payments Corporation is to be set up to take over the job of various retail payments such as manual paper-based clearing, cheque clearing, electronic funds transfer (EFT) and card-based paper system. The proposed corporation is to be set up under Sec. 25 of the Companies Act, under which the profits earned are not to be paid out but ploughed back for further development of the payment systems.

The bank unions, including the Reserve Bank Officers and Employees Unions, however, are apprehensive that the take-over of the clearing functions by the payments corporation would result in loss of income for public sector banks and the Reserve Bank of India (RBI). The unions are also against the move owing to fears of adverse implications on secrecy and confidentiality.

In its report tabled in Parliament on Wednesday relating to the Payment and Settlement Systems Bill, 2006, the Standing Committee on Finance has advised the Government to hold wider and in-depth consultations on the entire range of issues pertaining to the proposed corporation.

The committee, headed by BJP member and former Union Minister Ananth Kumar pointed out that issues such as the business model of the corporation, the terms and conditions of licensing and the service conditions of employees now engaged in clearing house operations should be discussed in detail for evolving a consensus on the proposal.

Although the proposed National Payments Corporation of India is not part of the provisions of the Bill, it is indicated in the `Statement of objects and reasons' of the Bill that the company would take over the operation of retail payment systems in the country.

In a dissent note to the committee's recommendations, Lok Sabha member Rupchand Pal has pointed out that with the setting up of such a corporation, the "whole payment and settlement system would be done by private entities (companies) only'' and thus stand outsourced in the "no so distant future.''

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