NPCI (Syllabus: GS Paper 3 – Economy)

News-CRUX-10     20th April 2024        

Context: The National Payments Corporation of India (NPCI) will review its decision to implement a 30% cap on the market share of payment players offering Unified Payments Interface (UPI) services by the end of 2024, said two people close to the development.

National Payments Corporation of India (NPCI)

  • About: It is an umbrella organization for operating retail payments and settlement systems in India.
  • Established:  As an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA), the NPCI operates under the provisions of the Payment and Settlement Systems Act, 2007, to create a robust Payment & Settlement Infrastructure in India.
  • Not-for-Profit Company: Incorporated as a “Not for Profit” Company under Section 25 of the Companies Act 1956, the NPCI focuses on bringing innovations in retail payment systems through technology for greater operational efficiency and wider payment reach.
  • Innovation in Retail Payment Systems: The company is dedicated to bringing innovation to retail payment systems by leveraging technology to enhance operational efficiency and expand the reach of payments.
  • Promoted by: NPCI is promoted by ten major banks, including the State Bank of India, Punjab National Bank, Citibank, Bank of Baroda, and HSBC.
  • Regulatory Board Composition: The regulatory board of the NPCI, headquartered in Mumbai, includes nominees from the RBI and ten core promoter banks.
  • Payment Systems: NPCI operates various payment systems, including National Financial Switch (NFS), Immediate Payment System (IMPS), Aadhaar-enabled Payments System (AEPS), and National Automated Clearing House (NACH).

Unified Payments Interface (UPI)

  • About: A system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. 

o It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.

  • Developed by: National Payments Corporation of India (NPCI).
  • Benefits of UPI

o Single-click Two Factor authentication

o Universal Application for transaction

o No risk of storing customer’s virtual address like in Cards.