NPCI Adopts New Blockchain Technology Called Vajra: Impact and Benefits

February 14, 2023

Unified Payments Interface (UPI), which is an instant payment system owned by the National Payments Corporation of India (NPCI), crossed one billion transactions in October 2019. UPI is an easy money-transferring mechanism that has become a convenient alternative for the IMPS system. The craze of UPI transactions in India is on a boom; however, India still has to adopt the upgraded digital payment systems that other countries are implementing already.

We already know that blockchain technology presents use cases across sectors, including healthcare, supply chain management, transportation, and so on. And blockchain for online payments is not an exception. Though the Indian government has always opposed the adoption of cryptocurrency to make digital payment exchanges, the government has incorporated this feature of facilitating transactions via blockchain. This logical approach of the government to adopt blockchain technology has opened up a huge opportunity for blockchain development companies.

Moreover, the RBI (Reserve Bank of India) is showing interest in launching India’s own digital currency. The RBI is planning for the development of a sovereign digital currency in the country and has had several internal meetings and discussions with central banks regarding the launch of a new cryptocurrency.

Understanding the necessity of a new paradigm in the banking system, India and NCPI are adopting the blockchain-based online payment-making mechanism. Vajra is a self-designed blockchain-based system adopted by NPCI. As blockchain technology provides the best safety features, Vajra has been designed to facilitate the process of payment clearing and settlement of NPCI products.

What is Vajra, and how does it facilitate secure payments?

The use of cryptography security in the Vajra platform secures the stored data. As cryptography protects the data by converting it into codes, these codes are accessible only to authorized entities. Vajra is a licensed platform based on blockchain; only an authenticated party registered under the network administrator can access the blockchain systems. It encrypts the transactions into digital signatures to ensure the transaction is secured. This does not let unauthenticated parties access or read the data. Vajra strongly facilitates transparency in real-time transactions and takes minimal time for the clearing process, settlement cycle, and processing of activities like reconciliation and reporting. It is built on Distributed Ledger Technology (DLT) that helps various payment companies provide highly secured and tamper-evident transactions on their cross-platform applications. DLT provides secured transactions with its distributed and immutable database. DLT stores details of all the secured transactions in digital packets called “blocks.”

With the authorized blockchain network, Vajra helps NPCI to break down the unrelated parties that are involved in the payment clearing and settlement cycle. Vajra also helps in detecting frauds using ML, which will soon be executed against ledger data. Moreover, Vajra frameworks take minimal processing time and cater to faster decisions over the disputes that occur. To improve the safety of transactions, it implements cryptography.

Vajra works on the following mechanism (stepwise):

  • Vajra is accessed by multiple payment entities performing transactions via cross-platform apps.
  • Once bank nodes receive API requests, they get processed on Vajra. The system has self-executing contracts containing business rules.
  • Once the requests are processed, the on-chain data gets added to the distributed ledger.
  • An authenticated participant carries a node in the blockchain network, and the node data can be accessed only by the node.
  • There are three types of nodes: A clearing house node for NPCI, a notary node only for biometric authentication of Aadhaar, and the last one is the participant node for banks/ASP/PPI/PSP.

Vajra Nodes

  • Notary Node: This node validates the transaction once the authentication is done by the Aadhaar biometric. The notary node receives transactions from the clearinghouse node.
  • Clearinghouse Node: This node has the admin rights of the Vajra platform. The clearinghouse node is maintained by NPCI.
  • Participant Node: Participant nodes are represented by the banks and can receive, post, and view transactions.

Benefits of Vajra

The NPCI’s main aim behind the launch of the Vajra is to bring cryptography security and faster transactions to the Indian payment system. The main advantage of Vajra is that it minimizes the processing time and fastens dispute resolution. Vajra provides high security to the credentials used in local payment transactions. This blockchain platform deals with issues like technical errors, and declining to conduct business and transaction processing.

Key benefits of Vajra:

  • Fast processing
  • Transparency besides near-real-time clearing and settlement.
  • Data security
  • Robust payment mechanism
  • Time sensitivity
  • Minimal reconciliation of transactions
  • Higher resilience through automation
  • DLT helps minimize operations and financial risks


As the Indian government is trying to integrate blockchain technology into the Indian payment system to provide secured transactions, NPCI marks its first step towards the launch of a licensed blockchain-based platform called Vajra. Vajra is designed to speed up the process of payment clearing and settlement of NPCI products. It provides a high amount of security to the transactions as only the registered entities on the network can access the platform.

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