Full Form of NPCI – National Payments Corporation of India
The full form of NPCI is the National Payments Corporation of India is a collective organization for all the retail payment companies in India. NPCI is set up under the guidelines of the Reserve Bank of India (RBI) and supported by Indian Banks Association. The NPCI is set up under the provision of payment and settlement systems act 2007.
The NPCI has ten core promoter banks namely SBI, PNB, Canara Bank, Bank of Baroda, Union Bank of India, ICICI bank, HDFC bank, Citibank, and HSBC). NPCI has made a significant impact on the retail payment in recent times when the whole digitization of money and electronic money is encouraged by the government of India.
The main agenda of NPCI is to provide the whole banking sector with better infrastructure to bring both physical and electronic payment and settlement systems. The retail payments for business and day to day transaction need to have an effective settlement system for both physical and electronic payments, to accommodate this, the NPCI exists.
- The main objective of NPCI is to consolidate, combine and integrate multiple systems for payment with different service levels into one nationwide standard uniform and business process for all the retail payment transactions. It is set up under the guide lance and support of the central bank RBI and the Indian Banks Association.
- Another objective of NPCI to design and facilitate an affordable payment process or mechanism so that the common man who make retail payments on day to day basis are benefited from the process by saving the cost and time.
- Thus NPCI exists with the purpose to design and implement a nationwide mechanism that is affordable for retailers to use on day to day basis without losing credibility and also to make sure the same process is standardized across the country so that the uniformity is also maintained.
- The vision on NPCI is to be able to provide the citizens of the country the best, secure, simple and easy to use payment option anywhere across the country for the retail payments in a significantly cost-effective way. The payments can be for day to day transactions also. NPCI’s main aim is to operate the main interest of the common man at first and to the interest of all its member banks.
- The vision of NPCI is very clear on its agenda and route map to make the payments for a common man in day to day transactions along with retail payments to be made simple, digitized and easy to use and traceable.
- It is clear that we live in the digital world and with the increase in the number of transactions of retail payments, it is a critical and difficult process, but by pushing towards digital money and payment portals, no doubt the tracking and ease of usage have a significant impact. The whole transaction can be made secure and credible. This is achieved as the vision of the NPCI.
Formation of NPCI
- Registered under section 8 of companies act, NPCI was founded in the year 2008. It was established by RBI and is owned by the collaboration of all major banks of the country. The paid-up capital is pooled in by the member banks which included 10 of the major banks in the country.
- The NPCI is formed to create nationwide standards in payments for business and retail payments. NPCI works with 10 promoter banks but is regulated by the RBI. The board is appointed with the non-executive directors who are also members of RBI who will have the final say and control over the NPCI.
Below are the few services offered by the NPCI to facilitate the retail transactions in the domestic boundary. Each of them is crated with a definite purpose and the same has been explained:
#1 – National Financial Switch (NFS)
The national financial switch is an ATM network through which the ATMs across (close to 2.7 ATMs) the country is maintained. The product has an uptime above 99.50% to make there is no interruption of service in real-time to the consumers
#2 – IMPS
Immediate Payment Service as the name indicates through IMPS, the money can be transferred immediately even through the mobile applications of the banks. The mode of transfer can be direct, mobile and internet banking. 59 member banks facilitate this service.
#3 – National Automated clearing house (NACH)
It is a technology backed web-based solution to make interbank high-volume periodic transactions. Pay-outs like dividends, salaries, the pension can be done through NACH.
#4 – Cheque Truncation System (CTS)
Through this CTS system, the cut off time for clearance of cheque can be extended. This provided more transparency of information, as well as the clearing time required, which is less for a cheque.
#5 – National Electronic Toll Collection (NETF)
NEFT has been created to take care of automated electronic toll collection across the countries in all highways through Fastag RFIDs tagged to each and every vehicle commuting in highways.
#6 – Bharath QR
This service line is taking care of payments for retail transactions through the Quick Response (QR) code for separate vendors. Payment using QR codes can be enabled through the banking applications.
#7 – Domestic Cards (RuPay cards)
Rupay is a card payment scheme launched by the NPCI to facilitate the debit payment in domestic boundaries using this payment Gateway. The network is interlinked between the member banks for real-time and quick money transfer.
#8 – Aadhaar Enabled Payment System (AEPS)
This payment vertical enables the retail transaction through the authentication of the Aadhaar card linked to that bank account during the enrolment of the customer.
#9 – BHIM
A UPI enabled payment gateway which can be used to pay or receive funds for retail transactions across the country.
NPCI is a consortium of major banks as its promoters and is regulated by the Reserve Bank of India. The sole purpose of this body is make sure the payments for retail transactions inside the domestic boundary happen smoothly and securely. The body has numerous services through which the purpose can be served. With the technological advancement and increase in the volume of transactions in this domain makes it challenging for the NPCI to come up with secure and safe solutions to offer these gateways.
The member banks form a network to co-ordinate them-self in real-time to facilitate real-time quick transfer of an amount from one account to another account. With the digitization of money and mode of payment, the NPCI has a significant challenge to cope up with the demand and also be able to deliver quality services without flaws.
This has been a guide to the full form of NPCI (National Payments Corporation of India). Here we discuss the objectives, vision, formation, and services of NPCI. You may refer to the following articles to learn more about finance –