National Payments Corporation of India

The National Payments Corporation of India (NPCI) is an initiative taken by the Reserve Bank of India (RBI) and Indian Bank’s Association (IBA) to operate the retail payments and settlement systems in India. This organisation was founded in the year 2008 under the Payment and Settlement Systems Act, 2007. NPCI has been incorporated as a ‘not for profit’ company under section 8 of Companies Act 2013.

To know more about NPCI for UPSC 2021, refer to the table given below:

Latest Updates on National Payments Corporation of India

1. NPCI launches Global hackathon ‘NPCI PayAuth Challenge’. It aims to identify alternative solutions around payment authentication methods in UPI. You can know in detail about the Unified Payment Interface – UPI on the link provided here.
2. WhatsApp has introduced payment services in India following approval by the NPCI. The National Payment Corporation of India approval also follows another recent direction imposing a cap of 30% of the total volume of transactions processed in Unified Payments Interface (UPI), applicable to all third-party app providers, effective from 1st January 2021.

Financial institutions and government initiatives in the finance sector are very important for the IAS exam. This article talks about NPCI and the initiatives taken under it. Candidates can also download the notes PDF at the end of this article. 

What is NPCI?

The National Payments Corporation of India (NPCI) serves as an umbrella body for the operation of retail payment in India. This organization was established by the Reserve Bank of India along with the Indian Bank’s Association. NPCI was incorporated in December 2008 and was centrally promoted by the Reserve Bank of India. The Certificate of Commencement of Business was issued in April 2009. 

Presently, NPCI is promoted by ten major promoter banks:

• State Bank of India
• Punjab National Bank
• Canara Bank
• Bank of Baroda
• Union Bank of India
• Bank of India
• ICICI Bank
• HDFC Bank
• Citibank 
• HSBC

Who are the regulatory members of NPCI?

Headquartered in Mumbai, the National Payments Corporation of India is an organization registered under section 8 of the Companies Act 2013. 

The regulating board of NPCI consists of the following members:

• Biswamohan Mahapatra as the Non-Executive Chairman
• Nominees from the Reserve Bank of India (RBI)
• Nominees from ten core promoter banks.

Currently, Dilip Asbe is the current managing director and chief executive officer of NPCI.

Read about similar topics from the articles linked below:

Objectives of NPCI

The National Payments Corporation of India (NPCI) was under the support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) with an aim of consolidating and integrating various systems into nation-wide uniform and standard business process that can be used as a retail payment system.  Another major objective of NPCI was facilitating an affordable payment system that can help the common people during financial inclusion. 

Under the PSS Act, 2007 as per the authorisation of RBU,  NPCI can operate the following payment systems: 

1.  National Financial Switch (NFS)
2. Immediate Payment System (IMPS)
3. Affiliation of RuPay Cards (debit cards/ prepaid cards) issued by banks and co-branded credit cards issued by non-banking financial companies (NBFCs) or any other entity approved by the RBI.
4. National Automatic Clearing House (ACH)
5. Aadhaar Enabled Payments System (AEPS)
6. Operation of Cheque Truncation System

Read about the difference between NEFT and RTGS in the linked article.

Products of NPCI

Some of the current products that were launched under the National Payments Corporation of India are discussed below:

1. RuPay: It is a domestic card scheme of India that has a magnetic stripe along with an EMV chip. The card is now accepted at all ATMs and has been issued by 300 cooperative banks and Regional Rural Banks (RRBs) in India. (Get the list of RRBs in India in the linked article.)
2. National Common Mobility Card: Also known as Rupay Contactless card,  it is a contactless payment technology that allows cardholders to use their card in the contactless payment terminals without the need to physically swipe or insert the card.
3. Bharat Interface for Money (BHIM): Bharat Interface for Money (BHIM) is a mobile payments application based on NPCI’s Unified Payments Interface (UPI). It provides the facility to easily send or receive money from other customers using the UPI. To know more in details on BHIM, refer to the linked article.
4. Unified Payments Interface (UPI): Unified Payments Interface (UPI) was introduced on 11th April 2016 as an instant inter-bank payment system. This payment system was developed to provide a mobile platform for instant transfer of funds between two bank accounts. To know more about Unified Payments Interface, refer to the linked article. 
5. Bharat Bill Payment System: The Bharat Bill Payment System is an initiative taken by NPCI along with the  Reserve Bank of India (RBI) for payment of all bills which will provide an interoperable and accessible bill payment service to its customers. 

National Payments Corporation of India is an initiative of the Reserve Bank of India and the Indian Banks’ Association. Its Immediate Payment Service (IMPS) has enabled India to become the leading country in the world in real-time payments in the retail sector.

Candidates should follow the latest developments in Current Affairs related to their UPSC 2021 preparation.

National Payments Corporation of India (NPCI):- Download PDF Here

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