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Digital India Initiative and Network of Online Payments in India


The world is developing at a fast pace and India is the frontrunner in the race among the under-developed nations. In the past years, major roadblocks in the economic growth in our country were lack of connectivity and digitization as the developed countries were increasing their efficiency through the vehicle of technology. Intending to kick these roadblocks aside, the Government of India came up with the ‘Digital India Initiative’.


About Digital India Mission

  • This mission was launched in 2015 by the Government to include digital delivery of governmental services and expansion of internet connectivity to far-flung areas.

  • The initiative aimed to promote the ‘Internet of Things’ approach, especially in the rural sector. The initiative aimed at bridging the urban-rural gap that has been increasing with every passing year and empowers the population of India digitally in the domain of technology.

  • Bharat Broadband Network Limited, a government subsidiary, has been assigned with the task of promoting the initiative.

  • The nine major pillars of the Digital India Initiative are Broadband Highways, Universal Access to Mobile Connectivity, e-Governance, e-Kranti, IT for Jobs, Electronics Manufacturing, Information for all, Early Harvest Programmes, and Public Internet Access Programme.


National Payments Corporation of India (NPCI)

  • NPCI was established by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) in 2008 as an umbrella body for operating retail payments and settlement systems in India.

  • It was created under the provisions of the Payment and Settlement Systems Act, 2007.

  • Considering the nature of NPCI, it has been introduced as a not-for-profit organization with an intent to provide banking infrastructure in India for physical and electronic payments and settlements.

  • The focus of NPCI is to bring innovation in retail payment mechanisms through the use of technology to achieve higher efficiency in the operation and expansion of payment systems.


Services under NPCI

UPI (United Payments Interface)

  • UPI is a real-time payment system that facilitates the hassle-free transfer of funds from one account to another. Users can add multiple bank accounts and use a UPI app as a one-stop-shop for banking transactions.

  • The best thing about UPI is that it allows people to exchange funds through a single mobile application thereby decreasing the hassle of switching between different apps for different bank accounts. The Government app for UPI transactions is called Bharat Interface for Money (BHIM-UPI).

  • According to data released by NPCI, the total no. of transactions conducted on BHIM-UPI crossed the 2 Billion mark in October 2020.

  • The key features of UPI are 1. Immediate Fund Transfer 2. 24x7 Access to account holders. 3. Can be utilized to make payments to merchants and traders. 4. Three-tier security (makes it a safer option.)

NFS or National Financial Switch

  • Intending to interconnect the ATMs in the country and to ensure facilitation of trouble-free banking to the people, the Institute of Development and Research in Banking Technology (IDRBT), Hyderabad conceptualized, developed, and launched National Financial Switch

  • It is a banking solution that facilitates routing of all the ATM transactions through interconnected bank switches, basically enabling people to use any ATM for withdrawal of money, regardless of the bank they have an account in.

  • The services offered in the NFS network include cash withdrawal, balance inquiry, PIN change, and mini statement.

  • It was started in August 2004 with 3 banks initially but through intensive work, the IDRBT connected over 2.3 lakh ATMs (as of 2017) in the country, making it the largest number of ATMs under a single network in India.


  • Adhaar enabled Payment Service empowers bank customer to use Adhaar as his /her identity to access their respective bank account (linked with Adhaar) and can perform basic banking transactions like checking balance, withdraw/deposit cash, etc.

  • The government has also used AePS in their Direct Bank Transfer (DBT) scheme wherein they transferred the benefits of various government schemes into the ‘Jan Dhan’ Bank Accounts directly linked to the Adhaar of beneficiaries.

IMPS (Immediate Payment Service)

  • IMPS or Immediate Payment Service offers instant 24x7 electronic fund transfer through banking apps.

  • It was launched publicly in November 2010 and is currently being supported by 53 commercial and 101 rural/urban/district and cooperative banks with transactions amounting to roughly $50 billion every month.

  • The sender needs to know the Name and Account number of the beneficiary along with the Indian Financial System Code which is a unique code given to every branch of the participant banks.

NETC (National Electronic Toll Collection)

  • The NETC is a system that facilitates electronic payment of toll at various toll plazas on the highways through the use of FASTag.

  • FASTag is a device that employs RFID (Radio Frequency Identification) technology to make toll payments directly by scanning a FASTag (RFID Tag) fixed on the windshield of the vehicle.

  • The unique FASTag for every vehicle is connected to an e-wallet where users can add money from their bank account. The RFID Scanner can even scan the tag while the vehicle is in motion.

NACH (National Automated Clearing House)

  • Some payments need to be repeated every month such as EMIs or bills. To make it hassle-free, NPCI came up with NACH wherein banks can facilitate users with automatic payment of interbank low-value debit/credit transactions which are repetitive in nature.

BBPS (Bharat Bill Payment System)

  • BBPS is an RBI mandated payment system which offers integrated and interoperable bill payment services to the customers, keeping in mind, the safety, reliability, and certainty of the transactions.

  • In BBPS, NPCI functions as authorized Bharat Bill Payment Central Unit (BBPCU) which has the responsibility to set business standards, rules, procedures, and other requirements.

  • Further, there are Bharat Bill Payment Operating Units (BBPOUs) which act as facilitators of the collection of repetitive payments for everyday utility services like water, gas, phone, DTH, etc.


Challenges and Conclusion

Although India has made tremendous progress in the field of technology in the past decade, some issues still haunt the government and act as roadblocks. Some of them are poor connectivity, the urban-rural digital divide, regulatory roadblocks due to lack of clarity in FDI policies, etc.

The Government has to work hard towards addressing these issues if it wants to make the most of the billions of rupees of public money in the campaign.


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