Aadhaar Payments Bridge System (APBS)

Context (TH | PIB): Wages under the MGNREGS were to be paid only through an Aadhaar-based payment system (ABPS).
A recent report highlighted that 34.8% of registered and 12.7% of active workers remain ineligible for this mandatory payment method.
The Union Rural Development Ministry responded that workers will get an exemption from the ABPS on a case-to-case basis.
MGNREGS has not adopted Aadhaar-enabled payment (AEPS). This scheme has opted for the ABPS.

What is the APBS?

The APBS is a digital platform.
It is implemented by the National Payments Corporation of India (NPCI) in collaboration with the Unique Identification Authority of India (UIDAI).
It acts on the principle that a person’s Aadhaar number becomes their financial address.
In cases of multiple accounts, APBS automatically sends money to the latest-mapped account for the same person.
The household job card can be deleted only in certain conditions, but not due to APBS.

The APBS acts as a bridge between the government departments, banks, and beneficiaries by leveraging the Aadhaar infrastructure.
It enables the seamless and efficient transfer of funds from the government to the intended recipients.

Direct Benefit Transfer (DBT): Facilitates direct transfer of government benefits and subsidies to beneficiaries’ bank accounts.
Financial Inclusion: Links Aadhaar with bank accounts, promoting access to banking services for the unbanked population.
Transparency and Accountability: Enhances transparency by reducing identity fraud and maintaining an auditable trail of transactions.
Cost Savings: Reduces administrative expenses, corruption, and paperwork associated with physical cash disbursements.
Efficiency and Convenience: Streamlines fund transfer processes, making disbursements faster and more efficient.
Scalability and Reach: Leverages the vast Aadhaar database to reach a large population, even in remote areas.
Promotes Digital Economy: Contributes to building a digital and inclusive economy by enabling efficient digital transactions.
Government Schemes and Programs: Used for disbursing social welfare schemes, scholarships, pensions, and subsidies.
Eliminates Intermediaries: Reduces leakages and inordinate delays by eliminating middlemen in the disbursement process.
Improves Service Delivery: Ensures benefits promptly reach recipients, reducing grievances.

Exclusion and dependency on Aadhaar.
Privacy and data security concerns.
Authentication failures and technical glitches.
Exclusion of vulnerable sections.
Lack of awareness and digital literacy.
Dependence on Internet and banking infrastructure.
Fraud and misuse.
Millions of poor and underprivileged people are added to the system without their consent.
Diverted payments have become a severe problem in Jharkhand.
- Elderly people dying of hunger after the APBS diverted their pensions to someone else’s account, particularly in Jharkhand.
The system suffers from a pervasive lack of accountability, making it a very opaque payment system, and few people clearly understand it.
- Even bank managers are not able to help people in the absence of guidelines for resolving payment problems.

AEPS finds its application in the bank-led financial inclusion model.
AEPS allows debits at micro-ATMS with a Business correspondent of the bank using Aadhaar authentication.
It is the initiative of NPCI and was started by joint efforts of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA).
Its objective is to facilitate interoperability across banks safely and securely.
AEPS permits both ON-US and OFF-US withdrawals effectively by enabling an authentication gateway for all Aadhaar-linked account holders.

ON-US Transaction: Where issuer and acquirer are the same (e.g. Punjab & Sind Bank Debit Card swiped on Punjab & Sind Bank POS terminal).
OFF-US Transaction: Where issuer and acquirer differ (e.g. Other bank’s debit/credit card on Punjab & Sind Bank POS terminals.)