The National Payments Corporation of India (NPCI) is a pivotal organization responsible for managing retail payment and settlement systems in India. Established under the Payment and Settlement Systems Act, 2007, NPCI is a joint initiative by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) to create a robust infrastructure for physical and electronic payments across the country.
Formed as a “Not for Profit” company under Section 25 of the Companies Act, 1956 (now Section 8 of the Companies Act, 2013), NPCI aims to support the entire Indian banking ecosystem by enabling efficient, secure, and scalable payment systems. Its core mission revolves around leveraging technology to enhance retail payment solutions and broaden their accessibility.
Founding and Growth
NPCI was originally promoted by ten major 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 N.A., and HSBC. Over time, its shareholding expanded to include 56 banks from various sectors, reflecting a more inclusive approach. In 2020, NPCI further broadened its base by including entities like payment service providers, payment banks, and small finance banks, as regulated by the RBI.
Milestones and Innovation
NPCI has transformed India’s retail payment landscape. One of its earliest achievements was the launch of RuPay, India’s first domestic card scheme, inaugurated by President Pranab Mukherjee, supported by Prime Minister Narendra Modi, and widely adopted under the Pradhan Mantri Jan Dhan Yojana (PMJDY).
Major NPCI Products and Services
1. RuPay:
RuPay is a homegrown card payment network supporting debit, credit, and prepaid cards. It promotes digital payments and provides contactless transaction capability via NCMC (National Common Mobility Card) for use in transport, tolls, and retail. Strategic partnerships with Discover, JCB, and China Union Pay extend RuPay’s global reach.
2. UPI (Unified Payments Interface):
A revolutionary real-time payment system that enables instant money transfers between bank accounts using mobile devices. UPI has positioned India as a global leader in digital transactions.
3. IMPS (Immediate Payment Service):
A real-time interbank electronic fund transfer service available 24/7, offering unmatched speed and convenience for retail payments.
4. NACH (National Automated Clearing House):
A platform for high-volume bulk transactions, such as salaries, subsidies, pensions, and bill payments. It supports both account-based and Aadhaar-based transactions through a secure, paperless mandate process.
5. APBS (Aadhaar Payment Bridge System):
Facilitates direct benefit transfers (DBT) to beneficiaries of various government schemes by linking bank accounts with Aadhaar numbers.
6. AePS (Aadhaar-enabled Payment System):
Empowers people in remote areas to access banking services using biometric authentication. NPCI also launched BHIM Aadhaar, enabling merchants to accept payments via Aadhaar authentication.
7. NFS (National Financial Switch):
India’s largest network of shared ATMs, allowing interoperability across banks for cash withdrawal, deposit, and card-to-card transfer services.
8. BBPS (Bharat Bill Payment System):
A unified platform for recurring bill payments, including electricity, water, telecom, insurance, DTH, loan EMIs, and more, ensuring convenience for customers across India.
9. NETC (National Electronic Toll Collection):
Enables seamless toll payments through FASTag, an RFID-based sticker on vehicle windshields. Drivers can pay tolls automatically without stopping, saving time and fuel.
Vision and Future
NPCI’s mission is to promote a “less-cash” society by offering accessible, reliable, and efficient payment solutions to every Indian. Its products are designed to reach all corners of the country and to simplify digital transactions for individuals, businesses, and governments alike.
Background and Governance
The Department of Payment and Settlement Systems (DPSS) granted NPCI in-principle approval on September 24, 2009, followed by a formal Certificate of Authorization for operating the National Financial Switch (NFS) from October 15, 2009. NPCI assumed NFS operations on December 14, 2009, after transitioning from IDRBT Hyderabad. It established standard regulations to onboard all Indian banks onto a unified platform.
To guide its technological development, a Technical Advisory Committee was set up, chaired by Prof. N.L. Sarda and co-chaired by Prof. G. Sivakumar, both from IIT Bombay, alongside senior banking professionals.
Conclusion
Through constant innovation and a commitment to financial inclusion, NPCI has become the backbone of India’s retail payment systems. From ATMs and mobile payments to toll plazas and biometric transactions, NPCI continues to shape the future of digital payments in India