What is NPCI in Banking?
The National Payments Corporation of India (NPCI) is an umbrella organization for all retail payment systems in India. It was set up in 2008 as a not-for-profit company with the objective of promoting digital payments and financial inclusion in India.
NPCI is owned by a consortium of major banks in India, including the State Bank of India, HDFC Bank, ICICI Bank, and Punjab National Bank, among others. It is responsible for designing, developing, and operating payment systems for the retail payments segment in the country.
Here are some of the payment systems operated by NPCI:
1) Unified Payments Interface (UPI)
UPI is a real-time payment system that enables instant money transfers between bank accounts through a mobile application. UPI is currently the most popular payment system in India, with over 2.3 billion transactions in March 2021.
2) National Electronic Funds Transfer (NEFT)
NEFT is a payment system that enables fund transfers between bank accounts in India. The system operates on a deferred net settlement basis, where transactions are processed in batches at set intervals during the day.
3) Immediate Payment Service (IMPS)
IMPS is a real-time payment system that enables instant money transfers between bank accounts through mobile, internet, or ATM channels. IMPS operates 24×7, and transactions are processed in real-time.
4) Bharat Bill Payment System (BBPS)
BBPS is a payment system that enables consumers to pay their bills through a single platform, including utility bills, credit card bills, and insurance premiums, among others.
5) Aadhaar Enabled Payment System (AEPS)
AEPS is a payment system that enables biometric authentication-based transactions through micro-ATMs. This system is particularly beneficial for people in remote areas who may not have access to traditional banking services.
NPCI has played a significant role in promoting digital payments in India and has made transactions faster, cheaper, and more accessible for consumers. NPCI has also collaborated with the government of India on several initiatives, including the Pradhan Mantri Jan Dhan Yojana (PMJDY) and the Digital India campaign, to promote financial inclusion and digitalization of the economy.
In conclusion, NPCI is an essential organization in the Indian banking industry that has played a crucial role in promoting digital payments and financial inclusion in the country. With the growing popularity of digital payments, NPCI is likely to continue to innovate and develop new payment systems to meet the changing needs of consumers and businesses in India.