NPCI posts Rs 773 Cr profit in FY22, Know Full Details

NPCI: The National Payments Corporation of India has been at the forefront of promoting digital payments in the country and manages several payment systems, including IMPS, UPI, BHIM, NACH, RuPay, AePs, FASTag, and BBPS, among others.

Although NPCI is often in the news for the large volume and value of transactions processed through these payment systems, its financial performance has not been thoroughly examined.

According to Fintrackr, which analyzed NPCI’s annual financial statement for FY22, the company’s operating revenue increased by 45.3%, from Rs 1,121.6 crore in FY21 to Rs 1,629.5 crore in FY22. NPCI has also been credited with creating one of the most robust and user-friendly payment stacks with its UPI system.

NPCI Operating Revenue

NPCI’s payment services revenue accounted for a large portion of their operating revenue in FY22, increasing by 46.3% to reach Rs 1,566.64 crore. Specifically, their certification income increased by 9.7% to Rs 10.39 crore, while their network income decreased by 42.4% to Rs 17.54 crore.

In addition, they earned Rs 34.93 crore from other operations such as compliance and membership fees, income from international partnerships, hologram charges, and card fees.

During FY22, the company generated Rs 230.6 crore of non-operating income, mostly from interest earned on their current investments.

The company incurred significant expenses promoting consumer awareness and retail payments in India through their products. As a result, their advertising and promotion costs increased over three-fold to Rs 210.33 crore in FY22 from Rs 56.93 crore in the previous fiscal year, representing 24.2% of their overall expenditure.

Additionally, the company’s employee benefit cost increased by 16.3% to Rs 197.53 crore in FY22 from Rs 169.89 crore in FY21. Furthermore, their spending on information technology and incentives for RuPay cards rose by 29.8% and 43.3% to Rs 99.46 crore and Rs 66.75 crore, respectively.

NPCI
NPCI

Rise in Company’s Expenses

NPCI’s expenses for legal-professional fees and contributions to the Payment Infrastructure Development Fund-RBI were Rs 26.72 crore and Rs 21.58 crore respectively, which caused its overall cost to increase by 27.5% to Rs 867.7 crore in FY22.

Despite this increase in expenses, the company’s profit rose significantly by 84.4% to Rs 773.4 crore in FY22 from Rs 419.5 crore in FY21. Its ROCE and EBITDA margin remained positive at 25.86% and 63.43%, respectively. NPCI spent Re 0.53 to earn one unit of operating revenue in FY22 at the unit level.

NPCI is a successful investment for its shareholders, which include public and private sector banks as well as other players in the financial services industry.

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However, its role as a partner overseeing major innovations in the sector is debatable because it has not been very generous in allowing profits to be made from these innovations. It is important to monitor the NPCI ecosystem and its influence to ensure that it does not hinder potential innovators and their innovations elsewhere.

While UPI offers excellent service at no cost to users, other financial transactions can have exorbitant fees. Despite RBI supervision, some banks charge high rates for forex transactions. NPCI has disrupted the profits and growth of credit card companies like VISA and Mastercard. It is crucial that NPCI does not become like the very entities it disrupted with the UPI stack.

(Inputs from Fintrackr)

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