The Indian government’s issues related to cryptocurrencies are already well-documented and worldly spread. However, it didn’t stop the National Payment Corporation of India (NPCI) to officially release their very own permitted Blockchain platform the ‘Vajra.’
The NPCI was created as an initiative under the Payment and Settlement Systems Act of 2007. It is brought to life by the joined efforts of the Reserve Bank of India (RBI) and the Indian Bank’s Association. NPCI’s ultimate mission is to become the best payment network in the world and to redefine the payment infrastructure in the country.
As of the time of this writing, there are 56 shareholder banks under the name of NPCI. Ten leading banks then support them. These ten noteworthy names include the State Bank of India, HDFC Bank, and the Bank of Baroda.
The Vajra Platform: What Is It And How Does It Work?
The ‘Vajra’ is the NCBI’s permissioned platform that is based on Blockchain. They released the ‘Vajra’ in the efforts to make India’s payment system more robust, much easier, and conclusively transparent. There are three distinct node types within the platform, and only those that are part of a network administrator can be taken under the wing of the Blockchain network.
Here are the three node types:
Clearing House Node: It holds the admin rights within the platform and is directly maintained by the NPCI. It is the one responsible for transferring the root-authority-signed TLS certificate to the Participant nodes from the permissions of the network. Additionally, it can bring in a new node within the platform if it wishes so.
Notary Node: It validates the transaction only if it is authenticated via the Aadhar biometric. It exclusively receives transactions from the Clearing House node.
Participant Node: The banks represent these nodes under the network. They can post, view, and receive transactions.
The Vajra enables these bank nodes to receive specific requests from various APIs and then eventually processes them. It has smart contracts within. These contracts are self-executing and contain a certain number of business rules. After the requests have successfully been processed, the data associated will then be added to the ledger.
The process can be simplified into these five steps:
- The user begins the transaction process by initiating their desired platform – Varja app, MicroATM, online banking, e-commerce, or point of sale. The payment, deposit, or collection request then goes to the issuing bank’s dedicated servers for either the payee or payer.
- By using APIs, DLT, or adapters, the bank nodes will receive and then record the transaction on the Blockchain platform.
- Varja will then validate if the transaction adheres to its business rules by way of the smart contracts and then triggers it appropriately.
- Upon clearing, it will record the transaction on the Blockchain, whether if its debit or credit. In cohesion to the viewing rights, the Participant nodes and the Clearing House can see the recorded information of the transaction within DLT.
- The NPCI will then create clearing fees and files from the DLT (every 15 minutes) and then posts it on the RBI for settlement processing.
Further Securing India’s Payment Transactions
Processing various payments by way of manual labor will always have significant risks. Human errors and long waiting or processing times are the main culprits. The Varja Platform resolves all of that by ensuring more efficient and secure payment transactions. There will be zero to minimal process times, and disputes will be handled rightfully by an active mechanism dedicated to it. Security won’t be an issue as well because it implements high-grade cryptography that drastically increases the protection of every transaction.
India’s blocking of other cryptocurrency and opting to create and subsequently releasing their own Blockchain platform’s effects are yet to be seen. However, the CEO of CoinDCX, Sumit Gupta, believes that this is a brilliant move by the country. He sees the release of Varja as India’s way of fully embracing the ecosystem of online payments. Adding to this, Nischal Shetty, the founder of WazirX, has also praised this move by the country. He has said that this could be the start of the Indian Rupees to increase in value in the global market and thus leading to more robust finance for the country.