India's Payments Platform Varja Gets the Blockchain Ball Rolling

The NPCI is an umbrella organization for retail payments and settlement systems in India.

It is an initiative of the Reserve Bank of India and Indian Banks' Association under the provisions of the Payment and Settlement Systems Act 2007, aimed at creating a robust payments infrastructure in India.

The NPCI aims to become "The best payment network globally." Currently, 56 banks are shareholders of the NPCI, which is supported by 10 banks: State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC.The Vajra platform Vajra is a permissioned blockchain-based platform.

First, when a user initiates a transaction on the Varja app, MicroATM, through online banking, at a point of sale or through e-commerce, the request for payment, collection or deposit comes to the server of the issuing bank, payer or payee.

Using DLT, APIs or adapters, the bank or nodes receive the transactions and record the same on the blockchain platform.

As per viewing rights, the Clearing House and Participant nodes see the transaction information recorded on DLT. Finally, every 15 minutes, the NPCI creates clearing files and fees from the DLT and posts it to the Reserve Bank of India for settlement processing.

"Starting this journey on a permissioned blockchain makes eminent sense to test the network operations of different types of nodes and the transactional activities conducted by the customers. At the time when China, Uruguay, Turkey, Thailand, Sweden, France etc. are have already started working on their pilot projects to bring their own Center Backed Digital Currencies, NPCI coming up with an entire payments platform which is secure, tamper-evident, and versatile is exemplary."

"No changes are required from the Bank infrastructure. The banks have to whitelist the Vajra adaptor IPs and ports. Banks have to generate the transaction for the corresponding banks which are part of the POC.".

The NPCI's development of a permissioned blockchain platform is considered a positive step by the Indian fintech industry.

"Someday, Indian banks could have an INR Stablecoin that can be used by anyone across the world. This would drastically increase the use of rupees online thus leading to a stronger rupee."