Previous Year Question

The National Payments Corporation of India, or NPCI, was established as an umbrella institution for retail payment and settlement systems in India. It was incorporated in 2008 through an initiative of the RBI and the Indian Banks’ Association.

Statement 1 is correct.

NPCI has developed payment systems that provide comparatively low-cost access to bank accounts, fund transfers and digital payments. These systems have helped connect rural populations, small merchants and people lacking convenient access to conventional banking facilities with the formal financial system.

Important NPCI systems supporting financial inclusion include:

• Aadhaar Enabled Payment System;

• Immediate Payment Service;

• National Automated Clearing House;

• Unified Payments Interface;

• Bharat Bill Payment System;

• National Financial Switch; and

• the RuPay card network.

AePS enables a bank customer to use Aadhaar authentication at a Business Correspondent or Micro-ATM for services such as cash withdrawal, balance enquiry and fund transfer. RuPay and UPI have expanded access to low-cost digital payments.

NPCI systems consequently promote financial inclusion by facilitating the effective use of bank accounts.

Statement 2 is correct.

RuPay is an indigenously developed domestic card-payment network launched by NPCI. Its name combines the words “Rupee” and “Payment”.

The RuPay network supports:

• debit cards;

• credit cards;

• prepaid cards;

• ATM, Point of Sale and online transactions; and

• contactless payments.

Its financial-inclusion role was strengthened by the issuance of RuPay Debit Cards with eligible bank accounts opened under the Pradhan Mantri Jan-Dhan Yojana.

As a domestic payment network, RuPay also helps reduce dependence on foreign networks for processing card transactions within India.