The financial landscape in India has experienced a paradigm shift over the past 4-5 years driven by the initiative of the Reserve Bank of India (RBI) along with contributions from the National Payments Corporation of India (NPCI), which is a not-for-profit company under Section 25 of the Companies Act 1956 (now Section 8 of the Companies Act 2013), and a joint initiative between the RBI and the Indian Banks' Association (IBA) to maintain and monitor the payment and settlement systems in the country. NPCI ensures that the payment systems of India are working effortlessly.

How Does NPCI Operate?

The NPCI was setup by RBI and owned by a consortium of public and private sector banks. Ten big banks were originally involved, including State Bank of India, Canara Bank, Punjab National Bank, Union Bank of India, Bank of Baroda, Bank of India, HDFC Bank, ICICI Bank, HSBC, and Citibank. In 2016, NPCI got more banks onboard including 15 private sector banks, 13 public sector banks, 10 multi-state co-operative banks, one foreign bank and seven regional rural banks. The total member banks have reached 56, thus spreading the shareholding across new entities.

At present, the NPCI manages and operates different retail payment solutions in India, including:

• Unified Payments Interface (UPI)
• Indian Mobile Payment Service (IMPS)
• National Financial Switch (NFS)
• National Automated Clearing House (NACH)
• RuPay
• Bharat Bill Payment System (BBPS)

What Are the Roles and Responsibilities of NPCI?

NPCI too has evolved with the changing digital payment landscape over the years. Below are a few of the main functions that NPCI performs:

• Creating Efficient Infrastructure for Payments :NPCI strives to build a stable and scalable payment and settlement mechanism for India.
• Enabling Digital Payments to One and All : The institution wants to reach every citizen, even in rural regions of the world.
• Promoting a cashless economy : NPCI aims to minimize cash transactions by motivating digital payment alternatives.
• New ways of payment solution : NPCI keeps on innovating better ways for people to make digital transactions.
• Inter-Bank Settlement : NPCI manages the inter-bank settlement of transactions.

Key Services Offered by NPCI

To facilitate the achievement of its objectives, NPCI offers several services that make digital payment simpler for everyone. Some of the most relevant ones are as follows:

1. Unified Payments Interface (UPI)

UPI is a revolutionary concept in the payment world. Through it, users can transfer money between bank accounts instantly with just an app on their mobiles. There is no need to remember elaborate details about banks as a mobile number or virtual payment address will suffice.

2. UPI LITE

This is a simplified version of UPI, meant for transactions below ₹500. It accelerates the payment process by permitting users to carry out low-value transactions without the need to enter a PIN.

3. RuPay

RuPay is India's domestic card payment network and provides an economical option compared to the international card schemes. RuPay cards are widely accepted at ATMs and online platforms, making transactions easier.

4. Bharat Interface for Money (BHIM)

BHIM is a Mobile App for Direct UPI Transactions. Using a secure platform, users can send money, request money, and pay bills.

5. National Automated Clearing House (NACH)

NACH allows bulk transaction being carried out, like salary and subsidies payments. This makes these processes more convenient to the users so that the payments are done promptly.

6. Aadhaar-enabled Payment Systems (AePS)?

Aadhaar-enabled Payment System (AePS) enables individuals to perform basic banking transactions using their Aadhaar number and biometric authentication features. This service is ideal for individuals who do not have access to traditional banking.

7. Bharat BillPay

This service offers a centralized platform for making different types of bill payments and simplifies the payment process for the customers.

8. IMPS (Immediate Payment Service)

IMPS is a 24*7 instant money transfer service between banks. It speeds up the process of transferring funds and makes banking transactions much convenient.

The Role of NPCI in India’s Cashless Eco-system

NPCI has been leading the charge towards making India into a cashless economy. The entity has helped move from system to system with the continuous introduction of many innovative payment solutions like UPI and BHIM, amongst others, making the digital payment ecosystem more and more ubiquitous, even in rural India. This promise is important to make a digital transaction culture in India.

Through persistent enhancement of its service and adoption of new-age technologies, NPCI aligns with the Indian Government initiative of Digital India, and helps the growth of a secure cashless financial system.

Conclusion

As digital payment channels gain ground, we are nearing closer to a cashless economy, and are proud of the strides taken by the NPCI towards financial inclusion and innovation in payment solutions, an imperative to shape the future of India.