A TRAINING REPORT ON

“NPCI Its ROLE AND PRODUCTS IN DIGITILIZATION OF

INDIAN BANKING”
Submitted To:
Satyug Darshan Institute of Engineering and Technology Bhupani
Lalpur Road, Village Bhupani Faridabad-121002, NCR, Haryana,
India
Submitted by: BASUDEV KUMAR
Roll No - 21020304019
Batch 2021-2024
In Partial Fulfillment of
Bachelor of Business Administration Industry Integrated (IIFSB)
HARYANA
(APRIL, 2023)

Satyug Darshan Institute of Engineering and Technology

Bhupani Lalpur Road, Village Bhupani Faridabad-121002, NCR,
Haryana, India affiliated to:
JC BOSE UNIVERSITY OF SCIENCE & TECHNOLOGY
YMCA

1
 DECLARATION:

I Mr. Basudev kumar hereby declare that this training report titled “A STUDY
OF NPCI (NATIONAL PAYMENTS CORPORATION OF INDIA) ITS
ROLE AND PRODUCTS IN DIZITILIZATION OF INDIAN BANKING is
the record of authentic work carried out by me during the period from to
and has not been submitted to any other University on Institute for the
award of any degree/diploma etc.

(Signature)

BASUDEV KUMAR
Date:

2
 BONAFIDE CERTIFICATE

This is to certify that Mr. Basudev kumar of SATYUG DARSHAN INSTITUTE OF

ENGINEERING AND TECHNOLOGY has successfully completed the project
work Titled (A STUDY OF NPCI (NATIONAL PAYMENTS
CORPORATION OF INDIA) ITS ROLE AND PRODUCTS IN
DIZITILIZATION OF INDIAN BANKING) in partial fulfillment of
Requirement for the completion of bachelor’s in business administration. (BBA-
IIFSB) course as prescribed by the JC BOSE UNIVERSITY OF SCIENCE AND
TECHNOLOGY, FARIDABAD, (HARYANA).

This project report is the record of authentic work carried out by him during the
period from 26.01.23 to 27.04.23 he has worked under my guidance.

(Signature)

Dr. Munish
Associate Professor, Management studies
PROJECT GUIDE

DATE:

3
 ACKNOWLEDGEMENT

I would like to express my gratitude and appreciation to all those who gave me the
possibility to complete this report. It gives me immense pleasure in presenting the
Report work.
On “NPCI (NATIONAL PAYMENTS CORPORATION OF INDIA) ITS
ROLE AND PRODUCTS IN DIZITILIZATION OF INDIAN BANKING.”
The success of this project is a result of sheer hard work and determination put in by
me with the help of my project guide. A special thanks to, Mr. HS BEDI and MR.
SWADESH CHAKRABORTY, who help stimulating, suggestions and
encouragement, helped me to coordinate my project especially in writing this report.

I would also like to acknowledgement with much appreciation the crucial role of the
Professor of SATYUG DARSHAN INSTITUTE OF ENGINEERING AND
TECHNOLOGY who helped me in collecting all required information to complete
the project report.

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 PREFACE

Many students may have work on this project in different way. I have also tried to
work on this project in a different way. It was for the first time I got the opportunity
to work in such a prestigious and well known organization and things which I have
experienced in my training time are going to help throughout my life time. I have
worked on this project with great enthusiasm and zeal.

Basudev Kumar
Date:

5
 INDEX

S.NO PARTICULARS PAGE NO.

CHAPTER 1 Introduction to study 7 to 8

CHAPTER 2 About Company 9 to 23

 NPCI Model

 Products of NPCI

 Role In Digitalization
CHAPTER 3 Research Methodology 24 to 28

CHAPTER 4 Data analysis and interpretation 29 to 31

CHAPTER 5 Findings 32

CHAPTER 6 Conclusion 33

CHAPTER 7 BIBLIOGRAPHY 34

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 CHAPTER 1
INTRODUCTION

National Payments Corporation of India (NPCI), an umbrella organisation for

operating retail payments and settlement systems in India, is an initiative of Reserve
Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of
the Payment and Settlement Systems Act, 2007, for creating a robust Payment &
Settlement Infrastructure in India.

Considering the utility nature of the objects of NPCI, it has been incorporated as a
“Not for Profit” Company under the provisions of Section 25 of Companies Act
1956 (now Section 8 of Companies Act 2013), with an intention to provide
infrastructure to the entire Banking system in India for physical as well as electronic
payment and settlement systems. The Company is focused on bringing innovations
in the r…
The National Payments Corporation of India (NPCI) serves as an umbrella body for
the operation of retail payment in India. This organization was established by the
Reserve Bank of India along with the Indian Bank’s Association. NPCI was
incorporated in December 2008 and was centrally promoted by the Reserve Bank of
India. The Certificate of Commencement of Business was issued in April 2009.

7
 Presently, NPCI is promoted by ten major promoter 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
• HSBC

 Who are the regulatory members of NPCI?

Headquartered in Mumbai, the National Payments Corporation of India is

an organization registered under section 8 of the Companies Act 2013.

The regulating board of NPCI consists of the following members:

 Biswamohan Mahapatra as the Non-Executive Chairman

 Nominees from the Reserve Bank of India (RBI)
 Nominees from ten core promoter banks.
 Currently, Dilip Asbe is the current managing director and chief
executive officer of NPCI.

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 CHAPTER 2
ABOUT NPCI

With a vision to be the best payments network globally and mission to touch every
Indian with one or other payments services, NPCI, the powerhouse of payment
systems in India is committed towards driving the digital India serving all Indians.

Established in 2008, under patronage of the Reserve Bank of India and the Indian
Banks Association, NPCI has embarked on a mission of touching every Indian
through its varied range of digital payment products like UPI, BHIM, RuPay,
NETC, AePS, BHIM Aadhaar, Bharat BillPay, NFS, NACH, CTS, IMPS and to
facilitate safe and secure digital payments.

 These products help in:

 Person to Person money transfers.

 Person to Business, such as kirana stores, petrol stations, recharges, e-
commerce, retail.
 Business to Business, such as Retailer to Supplier or Distributor.
 Business to Person as salaries, reimbursements, refunds, claims.
 Person to Government, such as tax, public transit, public distribution
services utility.
 Government to Person, in the form of direct benefit transfer payments of
various central and state government social security schemes
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  THE NPCI MODEL

 “India Stack” is closely associated with the payment systems of the future.
Along with innovations in data sharing and customer due diligence, India
Stack enables payment systems that are real time, biometric capable, and
connected beyond what most financial systems around the world have
achieved. India’s journey also has been a relatively short one. Less than two
decades ago, India’s payment systems were characterized by an overworked
network of clearinghouses, deferred transaction settlement, and a lack of
regulatory structure for payments. In short, India was far from leading the
world when it came to payments.

 How did India make such substantial progress so quickly? Should other
countries follow the same path? And crucially, what impact are these
developments having on financial inclusion?

 The answer is in large part intertwined with the story of the National
Payments Corporation of India (NPCI), a not-for-profit organization founded
in 2009 to manage India’s retail payment systems. Although it is less than a
decade old, NPCI has rolled out new products at a rate of more than one a
year. From a domestic Automated Clearing House (ACH) solution and the
RuPay card scheme,1 to the much-discussed Unified Payments Interface
(UPI) and Aadhaar-enabled payments, NPCI has relentlessly driven
innovation.

 NPCI was also central to India’s ambitious financial inclusion scheme, the
Prime Minister’s Jan Dhan Yojana (PMJDY). Launched in 2014 by Prime
Minister Narendra Modi, the program resulted in more than 300 million
bank accounts being opened in just over three years. NPCI has provided for
a RuPay debit card linked to each of these new accounts. By October 2018,
NPCI was processing 48 percent of all electronic payment transactions in
India (RBI 2018a).

10
 Based on research and interviews, this working paper shares the story of
NPCI, from the motivations for its creation through its operations today. The
paper examines the role NPCI played in transforming the way India manages
financial transactions, as well as what lessons can be learned from India’s
experience.

 Based on research and interviews, this working paper shares the story of
NPCI, from the motivations for its creation through its operations today. The
paper examines the role NPCI played in transforming the way India manages
financial transactions, as well as what lessons can be learned from India’s
experience. It concludes that several factors underlie NPCI’s success, and
these may be instructive for policy makers in other markets.

 Success factors include:

• An industry-led approach to ownership and governance, with

strong regulator backing
• Competitive economics through a utility model, mixed with
smart growth and a start-up culture
• A strategy of incremental, open-source product development
• A government/regulator that uses carrots and not only sticks
• A government/regulator that balances caution with progress.

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 1. PRODUCTS OF NPCI

Here are some products of NPCI listed below:

I. UPI ( unified payment interface)

II. IMPS (Immediate payment service)
III. RTGS (real time gross settlement)
IV. CTS ( cheque truncation system)
V. APBS ( Aadhaar payment bridge system)
VI. *99# (Unstructured Supplementary Service Data)
VII. AEPS ( Aadhaar enabled payment system)
VIII. BHIM (BHARAT INTERFACE FOR MONEY)

1. UPI ( UNIFIED PAYMENT INTERFACE)

Unified Payments Interface (UPI) is 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. It also caters
to the “Peer to Peer” collect request which can be scheduled and paid as per
requirement and convenience.

With the above context in mind, NPCI conducted a pilot launch with 21 member
banks. The pilot launch was on 11th April 2016 by Dr. Raghuram G Rajan,
Governor, RBI at Mumbai. Banks have started to upload their UPI enabled Apps on
Google Play store from 25th August, 2016 onwards.
UPI prioritized a modular and interoperable architecture from the start, and several
key design decisions were made to reach these goals. UPI focuses on enabling the
unbundling of accounts from the customer experience. To do this, APIs allow
financial providers to separate authentication (verifying the identity of the customer)
and authorization (verifying the availability of funds for the transaction) messages.

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2. IMPS ( IMMEDIATE PAYMENT SERVICE)

Immediate Payment Service (IMPS) is an instant payment inter-bank electronic

funds transfer system in India. IMPS offers an inter-bank electronic fund transfer
service through mobile phones. The service is available 24x7 throughout the year
including bank holidays. NEFT was also made available 24x7 from December
2019.[1] RTGS was also made available 24x7 from 14th December 2020.[2]
Unified Payments Interface is built on top of IMPS, with the key architectural
work done by the Mobile Payments Forum of India, IIT
Madras and IDRBT [3] [4] [5] [6] [7]
It is managed by the National Payments Corporation of India (NPCI) and is built
upon the existing National Financial Switch network. In 2010, the NPCI initially
carried out a pilot for the mobile payment system with 4 member banks (State
Bank of India, Bank of India, Union Bank of India and ICICI Bank), and expanded
it to include Yes Bank, Axis Bank and HDFC Bank later that year. IMPS was
publicly launched on 22 November 2010. As of April 2023, there are 722 member
banks which signed up for the IMPS service.

13
Around 200 million IMPS transactions amounting to roughly US$20 billion of
transaction amount happen every month in India. The sender requires to know the
bank account number and the Indian Financial System Code of the beneficiary to
transfer money.[

3. CTS ( CHEQUE TRUNCATION SYSTEM)

Common Type System (CTS) is a standard that specifies how type definitions
and specific values of types are represented in computer memory. It is intended
to allow programs written in different programming languages to easily share
information.

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 Functions of the Common Type System

 To establish a framework that helps enable cross-language

integration, type safety, and high performance code execution.
 To provide an object-oriented model that supports the complete
implementation of many programming languages.
 To define rules that languages must follow, which helps ensure that
objects written in different languages can interact with each other.
 The CTS also defines the rules that ensures that the data types of objects
written in various languages are able to interact with each other.
 The CTS also specifies the rules for type visibility and access to the
members of a type, i.e. the CTS establishes the rules by which assemblies
form scope for a type, and the Common Language Runtime enforces the
visibility rules.
 The CTS defines the rules governing type inheritance, virtual methods
and object lifetime.
 Languages supported by .NET can implement all or some common data
types…

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 4. RTGS ( REAL TIME GROS SETTLEMENT)

The full form of RTGS is Real Time Gross Settlement, it is a money transfer
process that is performed in real-time and without delays. RTGS requires Net
Payment which implies that activities are carried out at an individual level without
delay and not in batch-wise process. RTGS is one of the fastest methods of
transferring Interbank funds via online banking in India. Transfer of the funds
takes place between the two accounts in 30 minutes.

 While transferring money using RTGS method the following information is

required

 The amount of money which is to be transferred

 Name of recipient and payee
 Name of payee and recipient bank
 Payee/beneficiary bank IFSC code
 Payee/beneficiary bank account number
The RTGS money transfer method is operated by the Indian Reserve Bank and
thus it is one of the famous and safe methods of transfer of funds.

RTGS Timing And Limit

RTGS Timing Monday to Saturday(Leave on 2nd and 4th Saturday) – 8.00 to 4.30 am

RTGS Limit Minimum 2 lakhs to no upper ceiling limit.

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5. APBS ( AADHAAR PAYMENT BRIDGE SYSTEM)

 APBS is a unique payment system implemented by National Payments

Corporation of India (NPCI), which uses Aadhaar number as a central key
for electronically channelizing the Government subsidies and benefits in the
Aadhaar Enabled Bank Accounts (AEBA) of the intended beneficiaries. It is
a payment system based on Aadhaar numbers issued by UIDAI & IIN
(Institution Identification Number) issued by NPCI. APB System is used by
the Government Departments and Agencies for the transfer of benefits and
subsidies under Direct Benefit Transfer (DBT) scheme launched by
Government of India

 . What are the benefits of Aadhaar Payment Bridge (APB) System?

1. Eliminates inordinate delays, multiple channels & paper-work involved in

the existing system.
2. Transfers benefits & subsidies in a seamless & timely manner and directly
into the Aadhaar Enabled Bank Account.
3. In case of change in bank account, customer is not required to convey the
bank account details or change in bank details to the Government
Department or Agency.

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 6. AEPS ( AADHAAR ENABLED PAYMENT SYSTEM)

AePS full form is Aadhaar-enabled payment system. It is created by National

Payments Corporation of India. Users can use the AePS service to make
transactions on a micro-ATM by simply providing biometric information and an
Aadhaar number. The following are the specifics of AePS:

 AePS is a mechanism that allows an Aadhaar card holder to make transactions

through an Aadhaar-linked bank account in the same way that a debit/credit
card transaction does
 The transaction is completed by submitting the Aadhaar card number and
biometric details at Points of Sale (PoS) or micro ATMs via any bank’s
business correspondent using Aadhaar authentication
 The biometric data can be iris or fingerprint scan
 Users are not required to provide their bank account details to complete the
transaction
 AePS enables users to transfer funds from one bank account to another
 AePS transactions are safe and secure because users must submit their
biometrics in order to complete the transaction

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 Objectives of AePS Service

Following are the objectives of AePS service:

 Customers can use the AePS system to access their Aadhaar-linked bank
accounts to perform tasks including cash deposits, cash withdrawals, intrabank or
interbank fund transfers, balance inquiries, and getting a mini statement.
 It simplifies the distribution of funds under various government programmes
such as NREGA, Social Security pension, Handicapped Old Age Pension, and
others.
 It contributes to the Indian government’s and reserve bank’s goal of encouraging
payment electrification and increasing financial inclusion.
 Its goal is to lay a solid foundation for Aadhaar-based banking services

6. *99# (Unstructured Supplementary Service Data)

*99#, a USSD based mobile banking service of NPCI was initially launched in
November 2012. The service had limited reach and only two TSPs were
offering this service i.e. MTNL & BSNL. Understanding the importance of
mobile banking in financial inclusion in general and of *99# in particular,
various regulatory/trade bodies came together to ensure on boarding of all TSPs
on *99# (USSD 1.0). With the wider ecosystem (11 TSPs), *99# was dedicated
to the nation by Hon’ble Prime minister on 28th August 2014, as part of
Pradhan Mantri Jan Dhan Yojna .

*99# service has been launched to take the banking services to every common
man across the country. Banking customers can avail this service by dialing
*99# on their mobile phone and transact through an interactive menu displayed
on the mobile screen (available only for live TSPs). Key services offered under
*99# service include, Sending and Receiving interbank account to account
funds, balance enquiry, setting / changing UPI PIN besides host of other
services. *99# service is currently offered by 83 leading banks & all GSM
service providers and can be accessed in 13 different languages including Hindi

19
 & English. *99# service is a unique interoperable direct to consumer service that
brings together the diverse ecosystem partners such as Banks & TSPs (Telecom
Service Providers).

 It is a common technology platform developed by NPCI which allows the

Banks and TSPs to seamlessly integrate with each other to provide banking
services to the customers at large over the mobile phones (basic as well as
smartphone).

7. BHIM ( BHARAT INTERFACE FOR MONEY)

The BHIM app was launched in December 2016 by the National Payments
Corporation of India (NPCI). A new and modified version of Bharat Interface for
Money (BHIM), BHIM 2.0 has been launched under the Ministry of Electronics
and Information Technology. Under BHIM 2.0, the existing cap of Rs. 20,000 has
been increased to Rs. 1,00,000, from verified merchants.

The BHIM app can replace the existing mobile wallets and can appear as a
comparatively reliable option for the bank to bank transfers, unlike other e-
wallets. Since the transactions happen directly from the bank accounts, there is no
need to recharge the wallet and no commissions/hidden charges are required for
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 using the app. With the BHIM UPI app, the upper limit of a single transaction is
Rs. 10,000 and one can transfer Rs. 20,000 in 24 hours.

 Some of the key features of BHIM are mentioned below:

1. The BHIM app is tied to the mobile number and device ID. So using the app on
a different handset will require a separate authentication process.
2. Three-point authentication via mobile number, device ID, and UPI PIN.
3. Fingerprint-based biometric verification of transactions via Aadhaar will
prevent fraudulent transactions.
4. UPI PIN is needed for both opening the app as well as for transactions.
5. Resetting UPI pin requires debit card details and OTP SMS to authenticate.

 BHIM has the potential to demolish private mobile wallets owing to the
various advantages over the latter. Nevertheless, the challenge of advertising
and creating awareness about the app and getting the merchants on board
prevails. It would be difficult to make an impact unless BHIM is accepted at
physical stores, public transport, etc.

 Nearly all commercial banks support BHIM. Unlike e-wallets, money can be
directly transferred to bank accounts via BHIM.
 Aadhaar based payments at the scan of a “thumb” (biometric
authentication) are also possible by the app.

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  ROLE IN DIGITILIZATION
Transforming India's Digital Payment Landscape
 Recent years have seen a technological revolution in governance in India.
Government services have been slowly and steadily brought on board and today,
last-mile delivery happens with the click of a mouse in seconds. Digital Payments
transactions have been consistently increasing over the last few years, as a part of
the Government of India’s strategy to digitise the financial sector and economy.
Further, concerted efforts have been made to promote financial inclusion as one of
the important national objectives of the country.

 The key enabler at the centre of India’s transformed digital payment landscape is
the JAM Trinity - Jan Dhan, Aadhaar and Mobile. Pradhan Mantri Jan-Dhan
Yojana (PMJDY) is one of the biggest financial inclusion initiatives in the world,
launched in August 2014, to provide universal banking services for every
unbanked household. Aadhaar, the Unique Identification Authority of India’s
flagship product, is a simple but effective method to verify individuals and
beneficiaries based on their biometric information. Jan Dhan accounts, Aadhaar
and Mobile connections, taken together, have helped lay the foundations of a
Digital India where a vast array of Government services are made available
directly to the citizen with enhanced ease of access without the presence of any
intermediary (middle-men).

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 Digital Payment Ecosystem in India

 One of the major objectives of Digital India is to achieve “Faceless, Paperless,

Cashless” status. The promotion of digital payments has been accorded the highest
priority by the Government of India to bring each and every segment of our
country under the formal fold of digital payment services. The vision is to provide
the facility of seamless digital payment to all citizens of India in a convenient,
easy, affordable, quick and secured manner.

 During the last three years, digital payment transactions have registered
unprecedented growth in India. Easy and convenient modes of digital payment,
such as Bharat Interface for Money-Unified Payments Interface (BHIM-UPI);
Immediate Payment Service (IMPS); pre-paid payment instruments (PPIs) and
National Electronic Toll Collection (NETC) system have registered substantial
growth and have transformed digital payment ecosystem by increasing Person-to-
Person (P2P) as well as Person-to-Merchant (P2M) payments. At the same time,
pre-existing payment modes such as debit cards, credit cards, National Electronic
Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) have also grown
at a fast pace. BHIM-UPI has emerged as the preferred payment mode of
users. The Government of India also launched the digital payment solution e-
RUPI, a cashless and contactless instrument for digital payment which is expected
to play a huge role in making Direct Benefit Transfer (DBT) more effective in
digital transactions in the country. All these facilities together have created a robust
ecosystem for a digital finance economy.

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 CHAPTER 3

RESEARCH METHODOLOGY

Research
Research is defined as the creation of new knowledge and/or the use of existing
knowledge in a new and creative way so as to generate new concepts,
methodologies and understandings.

Research Methodology
Research methodology is the specific procedures or techniques used to identify,
select, process, and analyse information about a topic. In a research paper, the
methodology section allows the reader to critically evaluate a study’s overall
validity and reliability.

Types of Research
• Descriptive research
• Analytical research
• Fundamental research
• Conceptual research

 Descriptive research is a type of research that is used to describe

the characteristics of a population.

 Analytical research is a specific type of research that involves

critical thinking skills and. the evaluation of facts and information
relative to the research being conducted.

 Fundamental research is defined as basic and applied research in

the areas of science and engineering where the resulting information is
intended to be published and shared broadly

24
 Conceptual research, as the name suggests, is research that relates to
abstract concepts and ideas.

In this report, Descriptive research was taken. In Descriptive research, I had used
information or facts which is already available and analysed that to make critical
evaluation about the technical analysis of “central bank of India functions”.
It is primary concerned with testing hypothesis and specifying and interpreting
relationship and analysing facts and information already available.

Sample design
A sample design is made up of two elements. Sampling method refers to the rules
and procedures by which some element is included in the sample.
Some common methods are:
• Random sampling
• Stratified sampling
• Cluster sampling

Data collection
The task of data collection begins after research problem has been defined and
research design will be checked out. Collection of data is the first step in any
statistical investigation. Collection of data is very important function. The person
who is collecting statistical data has to observe self-restraint, confidence, patience,
caution and unbiased attitude while collecting data.
There are 2 types of data by which analysis can be done.

25
These are as follows:

• Primary data
• Secondary data

Objective of study

 Understanding the functioning of NPCI: NPCI is the nodal

agency for operating retail payment systems in India, and studying NPCI
may involve understanding its organizational structure, governance, and
various payment systems operated by it.

26
  Analyzing the impact of NPCI on the Indian payments
ecosystem: NPCI has played a significant role in transforming the
digital payments landscape in India. Studying NPCI may involve
analyzing its impact on various stakeholders, such as consumers,
merchants, banks

 Evaluating the performance and effectiveness of NPCI

initiatives: NPCI has launched several initiatives to promote digital
payments, and studying NPCI may involve evaluating the performance
and effectiveness of these initiatives in achieving their intended
objectives. This may include analyzing transaction volumes, success
rates, user feedback, and other relevant metrics.

 Assessing the regulatory and policy framework of NPCI:

NPCI operates within the regulatory and policy framework set by the
Reserve Bank of India (RBI) and other relevant authorities

 Identifying challenges and opportunities for NPCI: NPCI

operates in a dynamic environment with evolving technologies, changing
customer preferences, and emerging risks.

27
 Limitations of study

Limited data availability: NPCI may not disclose all the information
related to their report function, which can limit the study. Additionally, the
data available may be limited to a specific period, which can make it difficult
to assess the long-term effectiveness of the report function.

Reliance on self-reported data: The study may rely on data reported by the
bank, which may not be completely accurate or comprehensive. The data
may also be subject to manipulation, which can affect the results of the study.

Limited sample size: The study may be limited to a small sample size,
which may not be representative of the overall population of banks. This can
limit the generalizability of the study's findings.

Lack of standardized measures: There may not be a standardized way of

measuring the effectiveness of the report function of a bank, which can make
it difficult to compare across different banks.

28
 CHAPTER 4

DATA INTERPRITATION & ANALYSIS

Digital payment adoption is now very well entrenched in India. Overall, one third
ofIndian households are using it in some form or the other. Heartening to note that
almosta quarter of the households in the bottom 40% income group are using it as
well andit has not remained a rich or well educated person’s preserve. 15% households
in bottomand middle category would like to adopt digital payments.

Further, smart phone ownership is no longer a bottleneck for the adoption of

digitalpayments. The numbers speak for themselves

: Status of digital payment adoption among Indian households

% of households in each Income groups

income group who have… Total
Bottom 40% Middle 40% Top 20%

Never used it 72% 52% 39% 59%

Used in the past but

stopped 4% 13% 12% 9%

Use now 24% 34% 49% 32%

Never used but wouldlike to use

16% 14% 9% 14%

POTENTIAL USER BASE IF

“Desire to use” areconverted 40% 48% 58% 46%

“And past usersbrought

back” 44% 61% 70% 54%

29
 Digital payment methods - User share of households

% of households who do Income groups

digital payments in each Total
income group using… Bottom 40% Middle 40% Top 20%

Paytm, PhonePe
80% 79% 78% 79%
type apps

UPI 56% 45% 56% 52%

Online shopping usingcredit or

27% 42% 44% 38%
debit card

Use Bank App 18% 41% 43% 34%

Households which are using UPI as a platform may not be completely aware about
interoperability of the platform, there is a potential to create education about
interoperabilityto increase adoption of UPI

 Status of online banking

% of household in Income groups
each income group Total
who have… Bottom 40% Middle 40% Top 20%

Have smart phone

57% 72% 90% 68%

Do digital payments 24% 34% 49% 32%

Have mobile app for 14% 37% 59% 31%

bank

Use phone for banking

5% 17% 30% 14%
related matters

The banking system is also very well connected digitally to users via Aadhaar
linkages and SMS facility even the lower income groups. Familiarity with ATMs is also
veryhigh.

30
 FINANCIAL ANALYSIS OF NPCI

National Payments Corporation of India

Income & Expenditure Accounts from FY 2009-2010 to FY 2019-2020 ₹ in Crore

Year Year Year Year Year Year Year Year Year Year Yearended
ended ended ended ended ended ended ended ended ended ended
Particulars
31- 31- 31- 31- 31- 31- 31- 31- 31- 31- 31-
Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar-2020
10 11 12 13 14 15 16 17 18 2019

Income

Revenue from
Operations 18 71 99 136 217 326 377 504 677 902 1,099

Other Income 0 5 9 13 20 27 32 45 51 79 122

Total Income 18 76 108 149 237 353 410 549 729 980 1,221

Expenses

Operating Expenses 3 11 19 17 23 26 39 60 65 78 82

Employee Benefits
Expenses 1 8 20 28 37 49 65 94 129 149 157

Administrative and
Establishment Expenses
0 4 8 12 16 19 22 25 29 30 23

Depreciation and
Amortisation
Expenses 0 3 16 36 51 42 49 48 68 92 127

Other Expenses 2 3 6 8 21 47 50 70 85 154 313

Total Expenses 6 29 69 101 148 184 225 296 377 503 702

Surplus Before Tax 12 47 38 48 89 169 185 252 352 478 519

Tax Expense

Current Tax - 18 8 12 31 53 64 80 124 169 138

Mat Credit
entitlement - - -3 3 - - - - - - -

Deferred Tax - 2 9 0 0 5 1 9 0 2 -7

Total Tax Expenses - 20 13 16 31 58 65 89 124 171 131

Surplus after Tax 12 27 25 32 58 111 119 163 228 307 388

31
 Chapter 5
Findings

I. Heartening to note that almost a quarter of the households in the bottom 40%
income group are using it as well andit has not remained a rich or well educated
person’s preserve. 15% households in bottom and middle category would like to
adopt digital payments.

II. User share among household who are using digital payments in India. The
data that was collected clearly shows UPI as the star of digital payment
products suite with clear user perceived advantages of instant payments,
though ease of usage needs to be improved.

III. Online banking is less well developed than payments but has potential. As of
now the users of the mobile phone is low, lower than the availability of the
mobile banking app.

IV. There is 36 % gap between smart phone ownership and digital payment users
but further it is getting corrected.

V. NPCI helps in:

1. person to person money transfer.
2.Business to business such as petrol pump e-commerce retail etc.
3.Govt. to person, in the form of direct benefit transfer payment of various
central and state govt. security scheme.

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 CHAPTER 6

CONCLUSION

 The study of the National Payments Corporation of India (NPCI) reveals that
it plays a crucial role in transforming India's digital payments landscape. As
a not-for-profit organization established by the Indian government and
central bank, NPCI has been instrumental in developing and managing
various payment systems in India, including UPI, BHIM, Ru Pay, and IMPS,
which have significantly contributed to the growth of digital payments in the
country.

 The study highlights that NPCI's initiatives have led to increased financial
inclusion, accessibility, and convenience for millions of Indians, especially
those in underserved and rural areas. NPCI's focus on interoperability,
security, and innovation has fostered healthy competition among banks and
payment service providers, leading to a diverse and dynamic payments
ecosystem in India.

 The study also underscores the challenges faced by NPCI, such as

cybersecurity threats, regulatory compliance, and keeping up with the
rapidly evolving digital landscape. NPCI needs to continue to invest in
technological advancements, capacity building, and risk management to
ensure the resilience and robustness of its payment systems.

 Overall, the study concludes that NPCI has been a game-changer in India's
journey towards a less-cash economy, promoting financial inclusion and
digital empowerment. NPCI's role in creating a unified and interoperable
payment infrastructure in India has been commendable, and it will likely
continue to shape the future of digital payments in the country.

33
 CHAPTER 7

BIBLIOGRAPHY

1. HTTPS ://BYJUS . COM/FREE -IAS - PREP/NATIONAL -PAYMENTS -

CORPORATION-INDIA/

2. HTTPS ://WWW. MONEYCONTROL . COM/NEWS /TAGS /NATIONAL -PAYMENTS -

CORPORATION-OF-INDIA -(NPCI ). HTML

3. HTTPS ://WWW. TOFLER. IN/NPCI-INTERNATIONAL -PAYMENTS -

LIMITED/COMPANY/U67190MH2020PLC339220/ FINANCIALS

4. https://economictimes.indiatimes.com/topic/National-Payments-
Corporation-of/news

5. https://www.researchgate.net/publication/338385318_ANALYSIS_OF_
FINANCIAL_STATEMENTS

6. https://www.iedunote.com/role-of-banks-in-economic-development

34