By: Deepti Verma
An Informative Guide to India’s Fintech Backbone
The last ten years of Indian financial transformation has the National Payments Corporation of India (NPCI) as its fundamental structure. The National Payments Corporation of India (NPCI) has made India a leader in digital payment growth through its establishment of mobile payment systems and direct benefit transfer services and real-time bank transactions.
NPCI has become the driving force behind India’s financial systems after its establishment to develop powerful payment structures that combine ease of use with operational efficiency. The following article presents an in-depth evaluation of NPCI which includes its creation history and goals and the services it provides and the effects it has achieved.
What is NPCI?
The National Payments Corporation of India (NPCI) functions as a not-for-profit entity which began operations in 2008 through Section 8 of the Companies Act 2013 provisions. In 2008 the Reserve Bank of India (RBI) together with the Indian Banks’ Association (IBA) created this organization as a central authority to oversee all retail payment systems in India.
A governing board oversees NPCI through representatives from the RBI and IBA together with public and private sector banking institutions and payment service providers.
Key Objectives of NPCI
NPCI received its founding mission to achieve four essential objectives:
- Consolidating and integrating multiple payment systems in India
- Standardizing retail payment infrastructure across banks
- Increasing usage of electronic and digital payment systems
- Ensuring security, transparency, and cost-efficiency in payments
- Promoting financial inclusion by providing easy-to-use platforms.
The organization aims to modernize banking systems but also provides transaction services to every Indian citizen in urban areas and rural communities.
Shareholding Structure
The ownership structure of NPCI in 2024 consists of 67 shareholder banks which include:
- SBI and PNB along with Bank of Baroda form part of the public sector banking system.
- ICICI Bank and HDFC Bank and Axis Bank operate as private sector banks in India.
- Foreign banks which have established operations in India also form part of the shareholder base.
- Regional Rural Banks and Co-operative Banks among its shareholders.
The ownership structure reflects a collaborative banking sector operation since each shareholder holds a minimal percentage of ownership.
Major Products and Services by NPCI
The National Payments Corporation of India operates crucial payment systems across the country. The company offers its main products through the following overview.
1. Unified Payments Interface (UPI)
In April 2016 UPI emerged as a groundbreaking innovation for money transfers in India. Users can conduct immediate real-time bank account transfers using mobile devices through this system. The payment service allows customers to send money through virtual payment addresses (VPAs) and QR codes and mobile numbers.
Key Stats (As of June 2024):
The UPI system processed 10.9 billion transactions during June 2024 while achieving ₹17.3 lakh crore in transaction value for that month.
More than 500 million users across India have adopted UPI as their payment method
Several payment applications such as PhonePe, Google Pay, Paytm and BHIM use the UPI platform.
2. Immediate Payment Service (IMPS)
In 2010 IMPS became available for 24×7 interbank money transfers through mobile number or account number or Aadhaar number use. The IMPS payment system remains operational during weekends and holidays despite its differences from NEFT and RTGS.
The IMPS system performs more than 450 million transactions each month to provide Indians with their fastest money transfer option.
3. BHIM (Bharat Interface for Money)
The National Payments Corporation of India launched BHIM as its UPI application in 2016 to advance digital payment adoption. The government-backed BHIM operates as a secure reliable UPI alternative despite private applications dominating this market segment.
The system enables users to link Indian bank accounts through UPI and provides users with QR code scanning capabilities and account linking features and transaction record access.
4. RuPay Card
RuPay operates as India’s domestic card payment network which started its operations in 2012. The system was developed to decrease Indian dependence on international payment networks such as Visa and MasterCard.
The Current Reach consists of the following details:
- The RuPay card has reached a total of 70 crore RuPay cards issuance in 2023.
- More than 9 crore merchants accept RuPay as a payment method.
- The system functions with both ATM and PoS networks
- International transactions are now possible in specific countries
The RuPay payment network supports the government schemes including PM Jan Dhan Yojana and accepts PM-KISAN payments.
5. AePS (Aadhaar Enabled Payment System)
The AePS system lets users execute bank transactions through their Aadhaar number combined with biometric verification. The service enables Business Correspondents (BCs) to provide their services in rural regions.
Popular AePS services are listed below.
The system enables users to perform cash withdrawals and balance inquiries and receive mini statements and Aadhaar to Aadhaar fund transfers.
Each month the 1.2 billion AePS transactions demonstrate their essential function in enhancing financial inclusion throughout India.
6. NACH (National Automated Clearing House)
The electronic clearing system NACH facilitates bulk transactions which include salary credits as well as subsidies and pension payments and utility bill payments and EMIs.
Through NACH corporates and government institutions perform high-volume automated transactions that are both accurate and compliant.
7. NETC FASTag
The National Electronic Toll Collection (NETC) system operates under NPCI as a toll payment system which utilizes FASTag.
Corporates and government institutions use NACH to automate high-volume, repetitive transactions with accuracy and compliance.
NPCI operates the National Electronic Toll Collection (NETC) system which enables users to make automatic toll payments using FASTag.
As of 2023:
- More than 8 crore FASTags have been distributed to users.
- The payment system accepts cards at over 900 toll plazas.
- Digital toll collection enables customers to save both time and fuel.
- BBPS (Bharat Bill Payment System)
Through BBPS consumers can pay recurring bills including electricity services together with water services and gas services and DTH services and insurance premiums and loan repayment services.
The BBPS platform supports 20,000 billers and handles more than 100 million transactions monthly while providing services to both urban and rural consumers.
Achievements and Impact
NPCI has achieved significant success in advancing the digital payment revolution of India:
India surpassed 90 billion transactions in 2023 to become the world’s largest real-time payments market according to ACI Worldwide (Source: ACI Worldwide).
The retail digital payment sector in India reached 70% through UPI transactions.
Through AePS and RuPay financial services have reached millions of unbanked people living in underserved regions.
NPCI operates platforms which support three major government initiatives including Digital India together with Jan Dhan Yojana and Direct Benefit Transfer (DBT).
NPCI Subsidiaries and Global Reach
The company launched two subsidiaries to increase its market presence:
- The company launched **NPCI International Payments Ltd. (NIPL) to promote UPI and RuPay in international markets.
- The company has formed alliances with Singapore, UAE, Nepal, and France to enable UPI cross-border payments and RuPay card acceptance.
Final Thoughts
The National Payments Corporation of India (NPCI) has been instrumental in creating the present-day payment systems in India. The payment system’s four main platforms UPI, IMPS, AePS and RuPay accelerate financial operations while making them safer and more accessible to everyone.
NPCI powers the services you use when sending money or getting government subsidies or paying tolls or making online purchases. NPCI stands poised to transform both Indian digital payments and worldwide payment systems through its ongoing development and expanding global presence.
For more information, visit the official NPCI website: www.npci.org.in
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