India, Feb. 19 -- The finance ministry has raised concerns about State Bank of India's (SBI) plans to set up a joint venture with HDFC Bank and Bank of Baroda (BoB) to apply for a new umbrella entity (NUE) license and launch a rival retail payments network to the National Payments Corporation of India (NPCI).

The ministry is worried that involvement of public sector banks could limit the success potential of state-run NPCI's many projects, including RuPay, IMPS and UPI. The ministry does not want state-owned banks to compete with the government's flagship projects, according to unnamed sources as this may develop a "major competition risk".

Notably, the three banks own about 24.2% stake in NPCI, and process more than 50% of all digital ...