General Awareness play a vital role in all Examination. we can expect Questions from different Topics.In Banking and other competitive exams like RRB, CDS, LIC AO, RBI, SSC, UPSC, FCI, UIIC, OICL, SBI Clerks and PO the questions on Payment Systems in India and NPCI are being asked. Here we have given Banking awareness study notes on : Payment Systems in India and NPCI for SSC CGL Examinations 2019-20 & other examination. Candidates those who are all preparing for the Examination can use this study material.
Payment and settlement systems are the backbone of any economy. The last decade has witnessed substantial developments in this area of activity across the country. The Reserve Bank of India (RBI), under powers from the Payment and Settlement Systems Act, 2007, has endeavoured to ensure that India has ‘state-of-the-art’ payment and settlement systems that are not just safe and secure, but are also efficient, fast and affordable. Efforts in this direction has yielded handsome results. The planned development of the payment systems has been guided by RBI’s vision document for the payment and settlement systems in India which is being put out in the public domain since the year 2002; the last in this series was the Payment Systems Vision 2018. The current Vision document outlines the road map for the three-year period spanning from 2019 to 2021.
Some of the positive outcomes of the developments during the period 2015-2018 include ushering introduction of new and innovative systems, distinctive shift from paper to electronic payment modes, sizeable increase in transaction turnover, customer centric initiatives, international recognition, etc. Growth in electronic payments has been substantial with retail payments reflecting large growth in volume terms, while the Systemically Important Financial Market Infrastructures (SIFMIs), such as the Real Time Gross Settlement (RTGS) system and Financial Markets Clearing through Clearing Corporation of India Ltd. (CCIL), dominate in value terms.
New challenges have arisen requiring new strategies and planned efforts to address them. While building on the constructs and achievements of the previous Vision, the Payment Systems Vision 2021 recognises the need for continued emphasis on innovation, cyber security, financial inclusion, customer protection and competition.
PAYMENT SYSTEMS VISION – 2021
CORE THEME – EMPOWERING EXCEPTIONAL (E)PAYMENT EXPERIENCE
Vision Statement – Empower every I ndian with access to a bouquet of e-payment options that is safe, secure, convenient, quick and affordable.
The Vision 2021 for payment and settlement systems in India enhances the strong foundation built over the last two decades. While the pursuit towards a ‘less cash’ society continues, accompanied by the ambition to have a less-card India as well, the endeavour is to also ensure increased efficiency, uninterrupted availability of safe, secure, accessible and affordable payment systems as also to serve segments of the population which are hitherto untouched by the payment systems. The decade to follow will witness a revolutionary shift in the way Indian citizens use digital payment options and will also empower them with an e-payment experience that will be exceptionally safe, secure and truly world class,.
Vision 2021 concentrates on a two-pronged approach of, (a) exceptional customer experience; and (b) enabling an eco-system which will result in this customer experience. With this in view, the Vision aims towards,
- enhancing the experience of Customers;
- empowering payment System Operators and Service Providers;
- enabling the Eco-system and Infrastructure;
- putting in place a Forward-looking Regulation;
- supported by a Risk-focussed Supervision.
EXPECTED OUTCOMES OF VISION 2021
1 The Payment Systems Vision 2021 covers the period up to December 2021.
2 Vision 2021 focuses on further enhancements / improvements in all facets of payment systems.
National Payments Corporation of India (NPCI)
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 retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.
The ten core promoter banks are State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank N. A. and HSBC. In 2016 the shareholding was broad-based to 56 member banks to include more banks representing all sectors.
Services that NPCI provides
Through various FinTech innovations, the NPCI has contributed to India’s current payment ecosystem in a big way. The following are some of its prominent services:
United Payments Interface )UPI) is a real-time payment solution that links bank accounts with UPI platforms on mobile phones. It eliminates the need for a third-party wallet and enables the direct transfer of money from one bank account to another. Currently, UPI services are integrated with over 120 banks. Consumers can also use UPI for P2P transfers to family and friends.
Bharat Interface for Money (BHIM)
BHIM is an app that runs on UPI. It allows users to easily make payments by using just a registered mobile number or a virtual payment address (VPA). Though BHIM is not as widely used as some of its competitors like Google Pay, it offers a vast scope for financial inclusivity for citizen across India. This is because BHIM can be operated offline and does not require a smartphone. BHIM leverages NPCI’s *99# facilities–more on that below.
*99# or USSD services
NPCI’s *99# services run on USSD, which stands for Unstructured Supplementary Service Data. These services aim to bring traditional and newer banking solutions to citizens of India who may not have smartphones, internet or even traditional bank accounts. It aims to leverage as much of mobile banking as possible and works on low-value remittances so that more citizens can become integrated and familiar with banking services.
Now a part of the government’s Jan Dhan Yojna, RuPay is another big initiative of the NPCI that has influenced the way the average citizen makes financial decisions. RuPay is essentially a more affordable version of international debit and credit cards. These cards are issued as prepaid cards, debits cards and credit cards, as per the customer’s requirements. As of now, over 300 million RuPay cards are in circulation across India. More and more consumers are using RuPay for PoS and E-commerce transactions too.
IMPS stands for Immediate Payment Service. This system works around the clock and offers the ability to transfer funds instantly. It is because of IMPS that current innovations like UPI are possible. Unlike NEFT and RTGS, IMPS does not rely on traditional banking hours nor does it adhere to public holidays. With payments occurring through smartphones, all consumers need is the beneficiary’s mobile number to initiate the process. Of course, other payment details such as bank account number and IFSC codes can also be used to conduct an IMPS transaction.
BBPI stands for Bharat Bill Payment Interface. Recognizing how vital bill payments are to the retail payments industry, NPCI developed BBPI to facilitate the same. According to data released by the RBI, â‚¹6,223 billion is generated by India’s top 20 cities for bill payments alone. Over 70% of these bill transactions occurred through cash. BBPI is all set to function as the single platform that consolidates payments for bill payers and aggregators. So far, the NPCI has launched the pilot project for this platform. Only time will tell how widely it is accepted by vendors and consumers alike.