NPCI’s FY26 Profit Drops 32% YoY To ₹989 Cr As Tax Outgo, BHIM Loss Surge

The National Payments Corporation of India’s (NPCI’s) consolidated net profit fell 32.4% to ₹989.4 Cr in the financial year ended March 2026 from ₹1,463.2 Cr in FY25, as a sharp rise in tax expenses offset growth in its pre-tax profit.

The payments infrastructure operator’s revenue from operations grew 21.8% to ₹4,240 Cr in FY26 from ₹3,480.8 Cr in the previous fiscal year, according to its annual report. 

Including other income of ₹632.6 Cr, total income rose 20% YoY to ₹4,872.6 Cr in FY26. 

Income from payment services, NPCI’s biggest revenue stream, increased 16.3% to ₹3,735.8 Cr during the year under review from ₹3,212 Cr in FY25. The segment accounted for 88.1% of the revenue from operations in FY26. 

The UPI operator’s other revenue streams include network income, implementation services, certification income, fetching fees, among others.

NPCI’s profit before tax grew 5.4% to ₹1,888 Cr from ₹1,791.8 Cr. However, its tax expense surged 173.4% to ₹898.5 Cr from ₹328.7 Cr, pulling down its net profit. Current tax rose 19% YoY to ₹568 Cr, while deferred tax expense stood at ₹330.7 Cr compared with a deferred tax credit of ₹11.1 Cr in FY25. The previous year’s tax expense had also benefited from a prior-year tax adjustment of ₹137.6 Cr.

It is pertinent to note that as NPCI is incorporated as a not-for-profit company under Section 8 of the Companies Act, its financial statements use “surplus” instead of profit and report profit after tax as “surplus for the period”.

Where Did NPCI Spend In FY26?

NPCI’s total expenses increased 31.5% to ₹2,984.6 Cr in FY26 from ₹2,269.8 Cr in the previous year. 

Marketing: This remained NPCI’s biggest cost head, accounting for nearly 48% of its total expenses. Marketing expenses rose 27.3% to ₹1,420.3 Cr from ₹1,116 Cr in FY25. 

Within this, marketing and branding expenses increased 10.2% YoY to ₹770.3 Cr, while product incentives and cashback expenses jumped 55.8% to ₹650 Cr. 

NPCI said these expenses included payments to banks for RuPay cards, cashback campaigns to promote digital transactions, RuPay media and advertising campaigns, business-to-business initiatives, and sponsorships. 

Employee Benefit Expenses: This cost head rose 22.6% to ₹534.4 Cr from ₹435.8 Cr in the previous year. 

NPCI reclassified outsourcing costs from employee benefit expenses to administrative and other expenses from April 1, 2025. In FY26, it booked ₹54 Cr in outsourcing costs under administrative expenses, compared with ₹31.6 Cr included under employee expenses in FY25. 

Consequently, administrative and other expenses rose 54.4% to ₹293.4 Cr in FY26 from ₹190 Cr in the previous year.

Operating Expenses: NPCI’s operating expenses grew 38.6% to ₹291.4 Cr from ₹210.3 Cr in FY25. These included annual maintenance charges on network and IT equipment, network costs, testing and certification charges, and data centre expenses.

Notably, data centre rental expenses jumped nearly 20X to ₹10.4 Cr from ₹52.5 Lakh, while data centre power and fuel costs increased 51.5% YoY to ₹33 Cr.

BHIM’s Loss Widens

Loss of NPCI BHIM Services Ltd (NBSL), the wholly owned subsidiary that operates the BHIM app, widened nearly sixfold to ₹390.6 Cr in FY26 from ₹68.1 Cr in FY25.

NBSL generated a turnover of ₹27.8 Cr during the year and reported a loss before tax of ₹372.6 Cr.

The subsidiary was incorporated in June 2024 as a for-profit entity to drive the growth and expansion of BHIM. NPCI transferred its BHIM strategic business unit to NBSL with effect from October 1, 2024.

In comparison, NPCI Bharat BillPay Ltd’s net profit grew 33.6% to ₹31.5 Cr from ₹23.6 Cr on a turnover of ₹161.1 Cr.

NPCI International Payments Ltd, which is responsible for taking UPI and RuPay to overseas markets, reported a loss of ₹19.4 Cr, nearly double the ₹10 Cr loss recorded in FY25. Its turnover stood at ₹83 Cr.

The financial performance comes as UPI continues to scale to new highs. The payments system processed a record 24.51 Bn transactions worth ₹29.82 Lakh Cr in August 2026.

Meanwhile, NPCI continued to expand its digital payments ecosystem at the Global Fintech Fest 2026 this week, unveiling agentic AI platforms and open-source Android ATMs capable of instantly issuing RuPay cards and generating merchant UPI QR codes.

The post NPCI’s FY26 Profit Drops 32% YoY To ₹989 Cr As Tax Outgo, BHIM Loss Surge appeared first on Inc42 Media.