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Q79 (IAS/2017) Economy › Money, Banking & Inflation › Digital currency payments Official Key

Consider the following statements : 1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country. 2. NPCI has launched RuPay, a card payment scheme. Which of the statements given above is/are correct ?

Result
Your answer: —  ·  Correct: C
Explanation

The correct answer is option C because both statements are correct.

National Payments Corporation of India (NPCI) is an umbrella organization to operate retail payments and settlement systems in India.[1] It is an initiative of RBI and Indian Banks' Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust payment and settlement infrastructure in India.[1] By operating retail payment systems and creating robust payment infrastructure, NPCI inherently promotes financial inclusion by making banking services accessible to a wider population.

Statement 2 is also correct. RuPay Cards are among the services operated by NPCI[3], confirming that NPCI has indeed launched RuPay as a card payment scheme. RuPay serves as India's domestic card payment network, providing an alternative to international card schemes and supporting the government's vision of a less-cash economy.

Therefore, both statements 1 and 2 are correct, making option C the right answer.

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > National Payments Corporation of India > p. 192
  2. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 71
  3. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 71
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PROVENANCE & STUDY PATTERN
Full view
Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. Consider the following statements : 1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the co…
At a glance
Origin: From standard books Fairness: High fairness Books / CA: 10/10 · 0/10

This is a textbook 'Institutions & Instruments' question. NPCI is the backbone of India's digital economy; missing this indicates a gap in your core 'Banking & Finance' static notes. It requires zero current affairs digging if you have read the standard chapter on Payment Systems.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Does the National Payments Corporation of India (NPCI) help promote financial inclusion in India?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > National Payments Corporation of India > p. 192
Presence: 4/5
“• National Payments Corporation of India (NPCI) is an umbrella organization to operate retail payments and settlement systems in India. • It is an initiative of RBI and Indian Banks' Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust payment and settlement infrastructure in India. • It was incorporated as a 'Not-for-Profit Company' in 2008. \bullet• The headquarters of NPCI is located in Mumbai.”
Why this source?
  • Describes NPCI as the umbrella body created to operate retail payments and settlement systems in India.
  • Shows NPCI was established by RBI and IBA to create a robust payment and settlement infrastructure.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 71
Presence: 5/5
“• Unified Payments Interface (UPI)• Aadhar Enabled Payment System (AEPS)• Rupay Cards• National Automatic Clearing House (ACH)• Linking of ATMs across India (some other operators are also involved)• National Electronic Toll collection (It provides an electronic payment facility to customer to make the payments at national, state and city toll plazas by identifying the vehicle uniquely through a FASTag) NPCI is a 'Not for Profit' company where 51% stake is owned by public sector banks.”
Why this source?
  • Lists NPCI-operated retail digital payment platforms (UPI, AEPS, RuPay) that extend payment access across the population.
  • Notes NPCI's structure (not-for-profit; majority public-sector bank ownership) consistent with a public-good role in payments.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > National Strategy for Financial Inclusion (2019-24) > p. 241
Presence: 3/5
“RBI announced the National Strategy for Financial Inclusion (2019-24) in January 2020. It identifies financial inclusion as a key driver of economic growth and poverty alleviation worldwide. It aims to strengthen the broader ecosystem for promoting various modes of digital financial services. It has been prepared by Financial Inclusion Advisory Committee (FIAC) of the RBI. RBI has identified six major strategic objectives for financial inclusion.”
Why this source?
  • States the National Strategy for Financial Inclusion (2019-24) aims to strengthen the ecosystem for promoting digital financial services.
  • Provides the policy context that digital payment infrastructure supports financial inclusion objectives.
Statement 2
Has the National Payments Corporation of India (NPCI) launched RuPay as a card payment scheme?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 71
Presence: 5/5
“• Unified Payments Interface (UPI)• Aadhar Enabled Payment System (AEPS)• Rupay Cards• National Automatic Clearing House (ACH)• Linking of ATMs across India (some other operators are also involved)• National Electronic Toll collection (It provides an electronic payment facility to customer to make the payments at national, state and city toll plazas by identifying the vehicle uniquely through a FASTag) NPCI is a 'Not for Profit' company where 51% stake is owned by public sector banks.”
Why this source?
  • Snippet lists 'Rupay Cards' together with other NPCI-operated systems (UPI, AEPS), linking RuPay to NPCI's product suite.
  • Snippet also identifies NPCI as the not-for-profit company that operates retail payment systems.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Debit Card > p. 195
Presence: 4/5
“The different types of Debit Card in India depend upon the type of payment platform linked to the card. They include Visa Card, Maestro Card, RuPay Card, MasterCard, etc.”
Why this source?
  • Identifies 'RuPay Card' as a type of debit card used in India, confirming RuPay is a card payment scheme.
  • Supports the characterization of RuPay as a domestic card product (comparable to Visa/MasterCard).
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > National Payments Corporation of India > p. 192
Presence: 4/5
“• National Payments Corporation of India (NPCI) is an umbrella organization to operate retail payments and settlement systems in India. • It is an initiative of RBI and Indian Banks' Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust payment and settlement infrastructure in India. • It was incorporated as a 'Not-for-Profit Company' in 2008. \bullet• The headquarters of NPCI is located in Mumbai.”
Why this source?
  • Describes NPCI as the umbrella organisation to operate retail payments and settlement systems, implying it launches/operates card schemes.
  • Provides institutional context (NPCI's role and mandate) that supports NPCI being the operator/launching body for such schemes.
Pattern takeaway: UPSC consistently tracks 'Digital Public Goods'. In 2016/17 it was NPCI/RuPay; later it shifted to UPI, BHIM, and CBDC. The pattern is: If a financial tech platform is used by the masses, you must know its owner, its legal nature, and its objective.
How you should have studied
  1. [THE VERDICT]: Sitter. Directly covered in standard texts like Nitin Singhania (Ch 7) or Vivek Singh (Ch 2).
  2. [THE CONCEPTUAL TRIGGER]: Financial Inclusion & Digital Public Infrastructure (DPI). The syllabus keyword 'Inclusive Growth' directly links to the technological tools (JAM Trinity) enabling it.
  3. [THE HORIZONTAL EXPANSION]: Map the full NPCI Product Suite: UPI (Unified Payments Interface), IMPS (Immediate Payment Service), NACH (National Automated Clearing House), AEPS (Aadhaar Enabled Payment System), NFS (National Financial Switch), BBPS (Bharat Bill Payment System), and NETC (FASTag). Know the ownership: Initiative of RBI + IBA.
  4. [THE STRATEGIC METACOGNITION]: Always organize Banking study in a hierarchy: Regulator (RBI) → Operator (NPCI) → Instrument (RuPay/UPI). UPSC loves swapping the 'Parent Body' (e.g., claiming SEBI launched RuPay) or the 'Legal Status' (Statutory vs Company).
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 NPCI as the retail payments infrastructure operator
💡 The insight

NPCI is explicitly described as the umbrella organization to operate retail payments and settlement systems in India (its mandate and origin).

High-yield for UPSC: understanding institutional roles clarifies who implements payment reforms and inclusion measures; links to questions on payment systems, regulatory institutions, and public policy implementation. Master by mapping institutions, mandates, and key systems they run.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > National Payments Corporation of India > p. 192
🔗 Anchor: "Does the National Payments Corporation of India (NPCI) help promote financial in..."
📌 Adjacent topic to master
S1
👉 Key NPCI platforms (UPI, AEPS, RuPay) and inclusion
💡 The insight

These platforms are listed under NPCI and represent practical instruments for expanding digital payment access.

High-yield: exam questions often ask how digital instruments advance inclusion; knowing specific platforms lets aspirants explain mechanisms (access, interoperability, low cost) and evaluate policy impact. Useful for analytical answers linking technology to inclusion outcomes.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 71
🔗 Anchor: "Does the National Payments Corporation of India (NPCI) help promote financial in..."
📌 Adjacent topic to master
S1
👉 National Strategy for Financial Inclusion (2019–24) — digital payments focus
💡 The insight

The strategy explicitly aims to strengthen the ecosystem for promoting digital financial services as part of financial inclusion.

Important for UPSC: ties policy objectives to implementation tools (like NPCI-run systems). Helps in answering questions on national strategy, policy planning horizon, and the role of digital infrastructure in inclusion; prepare by linking strategy documents to institutional actors.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > National Strategy for Financial Inclusion (2019-24) > p. 241
🔗 Anchor: "Does the National Payments Corporation of India (NPCI) help promote financial in..."
📌 Adjacent topic to master
S2
👉 NPCI as the umbrella operator for retail payment systems
💡 The insight

NPCI is described as an umbrella organisation created to operate retail payments and settlement systems, which frames who can launch national payment schemes like RuPay.

High-yield for UPSC because many questions ask about institutional roles in India's payment architecture; links to banking regulation, financial inclusion and digital payments. Mastering this helps answer questions on which body runs/oversees specific payment instruments and policy initiatives.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > National Payments Corporation of India > p. 192
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 71
🔗 Anchor: "Has the National Payments Corporation of India (NPCI) launched RuPay as a card p..."
📌 Adjacent topic to master
S2
👉 RuPay as a domestic card payment scheme
💡 The insight

References explicitly list 'RuPay Card' among Indian debit card types and as part of NPCI's product set, confirming its identity as a card payment scheme.

Important for questions on payment instruments and domestic alternatives to global card networks; connects to topics like financial inclusion, card networks, and comparative payment systems (Visa/MasterCard vs RuPay). Knowing this aids elimination in MCQs and framing longer answers about payment ecosystem.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Debit Card > p. 195
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 71
🔗 Anchor: "Has the National Payments Corporation of India (NPCI) launched RuPay as a card p..."
📌 Adjacent topic to master
S2
👉 Legal/operational basis: PSS Act and RBI authorisation
💡 The insight

NPCI's formation and mandate are linked to the Payment and Settlement Systems Act, 2007 and RBI authorisation—key context for why NPCI operates schemes.

Useful for UPSC questions that probe legal foundations of payment infrastructure and regulator-authorised entities; connects institutional design to policy outcomes like standardisation of retail payments and regulatory oversight. Helps in answering questions on governance and legal authority of payment operators.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > National Payments Corporation of India > p. 192
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 70
🔗 Anchor: "Has the National Payments Corporation of India (NPCI) launched RuPay as a card p..."
🌑 The Hidden Trap

NPCI is a 'Not-for-Profit' Company registered under Section 8 of the Companies Act 2013 (formerly Sec 25 of 1956 Act). It is NOT a statutory body created by a specific 'NPCI Act', nor is it a PSU. It is an initiative of RBI and the Indian Banks' Association (IBA).

⚡ Elimination Cheat Code

Use 'Benevolent Mandate' Logic. Statement 1 says a National body helps 'financial inclusion'. In UPSC, broad, positive functional statements about major public-facing institutions are 99% likely to be True. It would be illogical for the National Payments Corporation to *oppose* or be irrelevant to financial inclusion.

🔗 Mains Connection

Mains GS-3 (Economy & Security): NPCI tools enable Direct Benefit Transfer (DBT), reducing fiscal leakages (Inclusive Growth). However, the centralization of financial data creates a 'Single Point of Failure' risk, linking directly to Cyber Security (Critical Information Infrastructure) and Data Privacy debates.

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