The Reserve Bank of India had set up the National Payments Corporation of India (NPCI) as an umbrella institution to devise an affordable payment mechanism and help in the financial inclusion process. A P Hota, chief executive officer of NPCI in an interview to FE?s Kumud Das & Saikat Das explains how the organisation is working towards consolidating the multiple payment systems into a nation-wide uniform and standard business process for all retail payment systems. Excerpts:

What is the mandate of NPCI and how are you working on various retail payment systems in the country?

The mandate of RBI is that NPCI should be the umbrella organisation for all retail payment systems in the country. Loosely speaking, NPCI can play an operator?s role in all retail payment systems and can act as the central processing organisations for various retail payment system, if need be, for inter-operability. Retail payments system are cheque clearing, Electronic Clearing Service (ECS), Electronic Funds Transfer (EFT), ATM Switching, POS Switching, card payment schemes and mobile payments. Currently, NPCI has been authorised only for three activities ? ATM switching, inter-bank mobile payments and Cheque Truncation. In-principle approval has also been received for buildinga card network, 24×7 remittance system and Automated Clearing House. The central bank will accord specific approval as and when NPCI gets ready technically, procedurally and organisationally to handle new activities.

Experts are of the view that NPCI?s mobile payment initiative is a game-changer. How will it reduce the cost of banking services and benefit retail investors?

For mobile payment, we are in the news for the last couple of months. You know that, the number of mobile subscribers in the country is now more than 600 million, which is substantially larger than the number of bank accounts. Quite likely, almost all bank account holders are mobile subscribers. If banks can deliver banking services on mobile, the cost of banking services would be considerably reduced. Banks would be able to process various transactions including the money transfer transactions in a straight manner without the use of cash or cheques. It would be a game-changer because of its 24×7 nature of operation. Money transfer can happen on a real time and as per the latest data, about 40 lakh customers have been registered for mobile payments.

What are the various charges that you levy on mobile payments?

Currently, banks as well as NPCI are providing the service free of charges. These are only promotional offers. From April 1, 2011, NPCI would be charging 25 paise per transaction. The remitting banks mayalso start charging from April 1. But the charges are likely to be very nominal. Banks know very well that unless, the charges are much lower than the National Electronic Funds Transfer (NEFT) charges, it would not take off.

By when do you expect to launch the 24×7 Remittance system across other channels like internet and ATM?

We have already launched the 24×7 remittance system on the mobile channel. We propose to use the same core infrastructure for handling remittances received by banks through other channels like ? internet, ATM and bank branches. We are discussing with banks as to how the same can be done. Once the blue print is ready, we would approach RBI with a request to enlarge the scope of the remittance system they have approved. It is just a few months away.

How long would it take for NPCI to complete the entire mandate given by RBI?

Payment systems has been evolving on a continuous basis. Mandate therefore is, not a fixed one. NPCI?s role would be to keep approaching the Reserve Bank of India with new ideas and new products on a continuous basis. But I can say that for next three years we have a number of projects at hand. Mobile payment was not a specific mandate of RBI. We approached the central bank with a blue print and it approved the same.

What type of technical infrastructure have you put in place?

Currently, our primary data centre is in Hyderabad with the disaster recovery centre in Mumbai. We have already taken third party data centre space at Chennai for our CTS project . Also, we are setting up a new communications network. Currently, we are using the INFINET of IDRBT for banks to connect to us.