National Payments Corporation of India - Definition, Objectives and Members

The Reserve Bank of India (RBI) and the Indian Banks Association (IBA) launched the National Payments Corporation of India (NPCI), headquartered in Mumbai, to manage the country's retail payment and settlement systems. According to the Payment and Settlement Systems Act of 2007, this organization was established in the year 2008. Following Section 8 of the Companies Act of 2013, NPCI has been incorporated as a "not-for-profit" corporation.

The RuPay card network, which is India's national card network, is run by NPCI. Moreover, it manages the Unified Payments Interface (UPI), a real-time payment system that enables immediate transfers between bank accounts.

In this article, candidates can learn about the topic “National Payments Corporation of India ”. This forms a major part of the UPSC IAS exam. Questions related to this are seen in Mains Paper III in the Indian Economy section of the above-said examination. Testbook provides comprehensive notes and online classes for UPSC, including different competitive examinations.

What is National Payments Corporation of India (NPCI)?

The Reserve Bank of India (RBI) and the Indian Banks' Association (IBA) supported the establishment of the National Payments Corporation of India (NPCI) to integrate diverse technologies into a national business process that could be utilized as a retail payment system. Facilitating an affordable payment mechanism that can aid the general public in financial inclusion was another important goal of NPCI.

The ten core promoter banks are 

• 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. 

In 2016 the shareholding was broad-based to 56 member banks to include more banks representing all sectors.

Read about types of Banks and their Functions in India here!

History of NPCI

• DPSS, in its meeting on September 24, 2009, approved NPCI for retail payment systems.
• Authorization for the National Financial Switch (NFS) ATM Network was granted on October 15, 2009.
• NPCI took over NFS operations at IDRBT Hyderabad on December 14, 2009.
• Membership regulations were established for enrolling all banks in the country.
• The aim was to include all banks on a standardized platform for nationwide payment systems.
• A Technical Advisory Committee was formed with Prof. N.L. Sarda as NPCI Chairman and Prof. G. Sivakumar as Co-Chairman from IIT Mumbai.
• Committee members included bank representatives at the Deputy General Manager and Assistant General Manager levels.

Latest Updates on National Payments Corporation of India

• The National Payments Corporation of India (NPCI) and IDFC First Bank recently introduced FIRSTAP, the country's first sticker-based debit card.
• An opportunity to explore how to attain sustainable finance is provided by the Global Fintech Fest 2022.
• Data about the Unified Payments Interface was recently made available by the National Payments Corporation of India (NPCI) (UPI). This claims that in July 2022, UPI exceeded 6 billion transactions.
• The National Payments Corporation of India (NPCI) and four banks—Kotak Mahindra Bank, Bank of Baroda, SBM Bank (India), and HDFC Bank—along with the Union Minister for Micro, Small, and Medium Businesses (MSMEs)—launched the second phase of the MSME RuPay Credit Card.

What is National Payments Corporation of India (NPCI)?

The National Payments Corporation of India, established under the Payment and Settlement Systems Act 2007, is an initiative of the Reserve Bank of India (RBI) and the Indian Banks' Association (IBA). It serves as an umbrella organization dedicated to operating retail payments and settlement systems in India, with the primary goal of establishing a robust Payment and Settlement Infrastructure in the country. The RBI created it to facilitate efficient retail payments and settlement operations.

Read about Non Profit and Not for Profit Organizations here!

Regulatory members of NPCI

The National Payments Corporation of India is a business registered under Section 8 of the Companies Act of 2013, with its main office in Mumbai. 

The following individuals make up the NPCI governing board: 

• Nominee from one of the 10 core promoter banks
• Non-executive chairman nominees, 
• Biswamohan Mahapatra was chosen by the Reserve Bank of India (RBI). 

Dilip Asbe is now serving as the managing director and CEO of NPCI.

Objectives of National Payment Corporation of India

NPCI was founded with a few primary goals in mind. The following includes a list of these goals. 

• The main goal of NPCI is to offer an efficient and reliable payment and settlement system for offline and online transactions in India. 
• By expanding its search to the farthest reaches of the nation, NPCI seeks to make India a cashless society. 
• The goal of NPCI is to strengthen and advance digital payments and their operational effectiveness through various technological advancements. 
• Former President Pranab Mukherjee proposed this digital payments regulator, and Prime Minister Narendra Modi gave his support. Later, as part of the Pradhan Mantri Jan Dhan Yojana, it was framed into a card of choice.

Products of NPCI

Some of the Products of NPCI are 

RuPay

• The customers of RuPay are given reasonably priced prepaid cards, debit cards, or credit cards, following their needs.
•  RuPay is the Indian equivalent of a Mastercard or VISA. It has had a significant impact on how the typical Indian manages their finances, especially in rural areas where the card is tied to several government benefit programs, including the Pradhan Mantri Jan Dhan Yojana and the Atal Pension Yojana. 
• More than 300 million RuPay cards are currently in circulation in India, and some of them can also be used abroad.

National Common Mobility Card

It is a contactless payment technology, also called a Rupay Contactless card, that enables cardholders to use their card in contactless payment terminals without having to swipe or insert the card physically.

Bharat Interface for Money (BHIM)

Like UPI, BHIM (Bharat Interface for Money) enables users to transition using their UPI ID. Users of BHIM can split bills, scan receipts to make payments, set privacy restrictions, and more.

Unified Payments Interface (UPI)

With the Unified Payments Interface (UPI), one mobile application can contact several banks. It is a real-time or instant payment service where customers' bank accounts are connected to a specific UPI ID. Without the need for a third-party wallet or payment gateway, it serves as an instant inter-bank payments portal and may be used to send money to friends, family, and businesses.

Bharat Bill Payment System

For the payment of all bills, NPCI and the Reserve Bank of India (RBI) have launched the Bharat Bill Payment System, which will offer their clients an open and interoperable bill payment service.

Conclusion

NPCI has transformed the way the typical Indian conducts financial transactions or makes payments. To ensure that everyone in the nation may utilize them and contribute to making the vision of Digital India a reality, the use and reach of the various payment channels under NPCI are wide. The NPCI has already impacted India's financial sector in its first ten years by developing payment ecosystems that aim to benefit the end user. The NPCI will undoubtedly continue to have an impact on different financial norms and consumer expectations in the years to come with the support of the RBI and a great list of core banks cooperating with its policies.

We hope all your doubts regarding the topic “National Payment Corporation of India" are addressed after going through this article. Testbook provides comprehensive notes for UPSC, including different competitive examinations. It has always assured the quality of its product, like content pages, live tests, GK and current affairs, mocks, and so on. Ace your preparation with the Testbook App!