Aadhar Payment Bridge System (ABPS) is used by the Government departments and agencies for the transfer of benefits and subsidies under Direct Benefit Transfer (DBT) scheme launched by Government of India. It is a unique payment system implemented by National Payments Corporation of India (NPCI). It uses Aadhar numbers issued by UIDAI & IIN (Institution Identification Number) issued by NPCI. The basic idea of the APBS is that a person’s Aadhaar number becomes his/her financial address. Instead of having to provide multiple account details to receive a bank transfer, one only has to provide Aadhar number.

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Banes of APBS:

• Unreliable seeding of Aadhar with bank account:
  • It is alleged that when Jan Dhan Yojna was launched, seeding of Aadhar was done without due verification
• Inconsistencies between Aadhar database and bank database:
  • Due to haphazard seeding, there are inconsistencies between Aadhar database and bank database which led to discontinuation of benefits and subsidies for a large number of poor beneficiaries.
• Diverted Payments:
  • It is often found that benefits are transferred to others account under APB system.
  • A recent study of the Indian School of Business (ISB), based on an analysis of more than 10 million payments in 2014-18, concludes that 38% of all the APBS payments of MGNREGA wages in Jharkhand “redirect wages to a completely unrelated account”.
• Uninformed consent:
  • It is alleged that bank accounts have been mass-mapped onto the APBS without following due process of consent.
• E-KYC issues:
  • Compulsory e-KYC became a nightmare for poor people, for a number of reasons: some did not know what they were supposed to do, others had problems of biometric authentication, others still struggled with inconsistencies between the Aadhaar database and the bank database.
  • Among the worst victims were old-age pensioners. To this day, in Jharkhand, many pensioners are struggling to understand why their pension was discontinued after e-KYC was made compulsory.
• Account Mapping:
  • It is found that benefits are transferred to beneficiary rarely used account.
  • Last year, Airtel allegedly opened its customer account to airtel payment bank without following due consent and verification norms and mapped this accounts to which subsidy payments would be directed.
• Lack of accountability:
  • The ABPS is a very opaque payment system and few people have a clear understanding of it. When people have problems of diverted or rejected payments, there is no proper mechanism to resolve the issue.
  • There is no agency that is responsible for enforcing the consent norms and other “guidelines” issued by the NPCI.

Boon of APBS:

• APBS has led to digitization of a large number of retail payment transactions which were predominantly either in cash or cheque.
• Eliminates inordinate delays, multiple channels & paper-work involved in the existing system.
• In case of change in bank account, customer is not required to convey the bank account details or change in bank details to the Government Department or Agency.
• Customer not required to open multiple bank accounts for receiving benefits and subsidies of various social welfare schemes – Customer just need to open one account and seed his/her Aadhaar number in the bank account to start receiving benefits and subsidies directly into his/her Aadhaar Enabled Bank Account.
• It helps the government to serve the goal of financial inclusion and reframe subsidy management program.

Way forward:

• Responsibilities should be clearly assigned in enforcing the consent norms and other guidelines issued by the NPCI.
• The RBI may be the nominal regulator, but the real action is at the NPCI, the UIDAI and other strongholds of the Aadhaar lobby and accordingly accountability should be assigned where any negligence should not go unnoticed.
• Supreme Court’s recent judgement in the Aadhaar case makes Aadhaar mandatory for availing facilities of welfare schemes and government subsidies as it empowers the poor and marginalised.
• An independent and participatory review of the system is long overdue.