Context:Unified Payments Interface (UPI) processed a record 24.51 billion transactions worth ₹29.82 lakh crore in August 2026, according to the National Payments Corporation of India (NPCI).
Annual growth: Transaction volume rose 22% and value rose 20% year-on-year.
NPCI: An umbrella organisation for India’s retail payment and settlement systems, established as an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
UPI: Enables real-time bank-to-bank payments between individuals and merchants.
International acceptance: UPI is accepted in 11 countries, including Singapore, UAE, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, Greece and Uzbekistan; Uzbekistan is the latest addition.
Prelims: UPI was developed by NPCI and launched in 2016; it operates through the Immediate Payment Service (IMPS) infrastructure.
Prelims Question
Q1. With reference to India's digital payments ecosystem, consider the following pairs:
Entity/System
Description
1. NPCI
Umbrella organisation for retail payment and settlement systems
2. UPI
Real-time bank-to-bank payment system
3. IMPS
Infrastructure on which UPI operates
4. RBI
Private-sector operator responsible for running UPI
Which of the pairs given above are correctly matched?
(a) 1 and 2 only (b) 1, 2 and 3 only (c) 2, 3 and 4 only (d) 1, 2, 3 and 4
Answer: (b)
Explanation:
1 — Correct: NPCI operates as an umbrella organisation for India's retail payment and settlement systems.
3 — Correct: UPI was built over the IMPS infrastructure.
4 — Incorrect: UPI is operated by NPCI, not directly by the RBI. NPCI itself was established as an initiative of the RBI and Indian Banks' Association (IBA).
Q2. Consider the following statements regarding the Unified Payments Interface (UPI):
UPI facilitates fund transfers directly between bank accounts without requiring the beneficiary's bank account details to be exchanged for every transaction.
UPI was developed by the National Payments Corporation of India (NPCI) and launched in 2016.
UPI is itself a central bank digital currency issued by the Reserve Bank of India.
UPI transactions can be used for both person-to-person and merchant payments.
Which of the statements given above are correct?
(a) 1 and 2 only (b) 2 and 4 only (c) 1, 2 and 4 only (d) 1, 2, 3 and 4
Answer: (c)
Explanation:
Statement 1 — Correct: UPI enables account-to-account payments using identifiers such as UPI IDs, thereby simplifying the payment process.
Statement 2 — Correct: UPI was developed by NPCI and launched in 2016.
Statement 3 — Incorrect: UPI is a payment system/interface, not a Central Bank Digital Currency (CBDC). India's CBDC is the Digital Rupee (e₹) issued by the RBI.
Statement 4 — Correct: UPI supports both P2P and merchant transactions.
