NPCI Tightens Rules for Banks Looking to adopt UPI

Indian banks which have not adopted the Unified Payment Interface (UPI) yet may henceforth find it difficult to provide their customers this latest payment solution.

National Payments Corporation of India (NPCI), which launched UPI last year, is being extra cautious about going live with smaller banks after the ₹25-crore fraud at Bank of Maharashtra (BoM) on February 22.

AP Hota, Managing Director of NPCI, told newspersons that the umbrella body for retail payments will not allow banks to join UPI unless they have a thorough reconciliation process or have been audited by the best of auditors.

“So far, about 44 leading banks are on UPI and getting the 45th bank will be tougher because we will be very circumspect,” Hota said, adding that NPCI has been learning a lot from the recent financial frauds, especially the BoM episode, and will implement stringent rules for the banks besides working towards making UPI more secure to use.

Admitting that the BoM fraud occurred due to a bug in its UPI application, Hota said that the NPCI is investing heavily on cyber security and making the UPI more secure. The corporation spends about ₹50 crore annually on cyber security.

He added that corrective steps have been taken for the recovery of the money lost due to the fraud, which occurred after BoM had procured a UPI solution, from a vendor called InfrasoftTech, which already had a bug. This resulted in some 50-60 people figuring out the loophole in the system and siphoning off the money into their own accounts.

Pact with Reliance Retail

Hota was speaking at an event where NPCI tied up with Reliance Retail to launch its digital payments solutions — UPI and BHIM — across all retail stores in Mumbai.

There are about 200 Reliance stores (across all formats) in Mumbai. The QR code-based digital payment solutions will soon be rolled out across the country and will be extended to other retailers. NPCI is already talking to Big Bazaar. Technology and point-of-sale (PoS) support are being provided by Innoviti Solutions.

NPCI is also looking to more than double the number of POS machines at merchant outlets to 5.5 million over the next six months from 2.4 million at present. “The new POS machines will be Aadhaar-enabled and the old ones will be upgraded soon,” Hota added.

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