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Aadhaar-Based Payment System (ABPS)  |

Aadhaar-Based Payment System (ABPS) 

Context

∙ Under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) payments are made mandatory through an Aadhaar-based payment system (ABPS).

What is the Aadhaar-based payment system (ABPS)?

∙ Under ABPS, workers’ 12-digit Aadhaar numbers are linked with their job cards as well as their bank accounts.

∙ ABPS uses the worker’s Aadhaar number as their financial address.

∙ Aadhaar must be mapped with the National Payments Corporation of India (NCPI) database; and finally, the bank’s institutional identification number must itself be mapped with the NPCI database.

∙ The system was first made mandatory with effect from February 1, 2023 but, through several extensions, the Centre allowed it until December 31, 2023.

∙ The ABPS became mandatory from January 1, 2024.

Benefits of Payments through ABPS

∙ Easy and Secure Authentication: Aadhaar provides a unique identification method through biometric authentication (fingerprint or iris scans), making transactions secure and reducing the risk of fraud.

∙ Convenient: Aadhaar-based payment systems eliminate the need for physical cards or documents for financial transactions.

∙ Users can authenticate themselves using their Aadhaar number and biometrics, making the process more convenient.

∙ It ensures the payment of beneficiaries into their bank accounts, even in case of frequent change of bank account by the beneficiary.

∙ Reduced Leakages in Subsidy Programs: Aadhaar is often linked to various government subsidy and welfare programs, ensuring that the benefits reach the intended beneficiaries directly.

∙ Promotion of Digital Payments: Integration of Aadhaar into payment systems contributes to the government’s push for a less-cash economy by promoting digital transactions.

∙ This aligns with broader initiatives to enhance the digital infrastructure of the country.

Concerns with ABPS Payments

∙ Over- Reliance: Over-reliance on technical tools has resulted in problematic implementation, with beneficiaries devoid of a proper recourse for corrections in the system.

∙ Authentication Issues: There have been instances where individuals faced difficulties with biometric authentication due to factors such as poor connectivity, technical glitches, or errors in the Aadhaar database.

∙ Errors in any step of the process result in payment failures.

Conclusion

∙ The Ministry of Rural Development has said that it may consider an exemption from ABPS on a case-to-case basis for gram panchayats if there are technical issues.

∙ MGNREGS remains a vital demand-driven welfare scheme that helps the rural poor and its implementation must not be dependent upon a technological system.

∙ The Ministry could conduct social audits to ascertain the extent of the problem before insisting on ABPS

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