Press Information Bureau

Government of India

Ministry of Finance

23-February-2012 16:35 IST

Task Force on an Aadhaar Enabled Unified Payment Infrastructure Submits Report to Finance Minister

Shri Nandan Nilekani, Chairman of the Task Force on an Aadhaar-Enabled Unified Payment Infrastructure submitted the final report of the Task Force to the Union Finance Shri Pranab Mukherjee, here today. The Task Force which was chaired by Chairman, UIDAI also included Secretaries of the Departments of Expenditure, Financial Services, Fertilisers, Petroleum, Agriculture, Rural Development, and Food and Consumer Affairs among others. The members also included DG, UIDAI, Controller General of Accounts (CGA), representatives from the NIC, RBI, IBA and NPCI. The Task Force was constituted in September 2011 to recommend, inter alia, a detailed solution architecture for direct transfer of subsidy through a payments bridge wherein funds can be transferred into any Aadhaar–enabled bank account on the basis of the Aadhaar number.

The salient recommendations of the Task Force include that the the strategic transformation of governance can be brought about by promoting the usage of electronic payments across the board.  It also recommends that beneficiaries of all social safety net programs (MGNREGS, SSP, JSY, IAY, scholarships, etc.) and recipients of direct subsidy transfer payments (LPG, Fertilisers, kerosene, etc.) can greatly benefit by receiving their payments electronically, directly into accounts of their choice at either banks or post offices. The Task Force recommends that frontline development workers such as school teachers, Anganwadi workers, ASHA workers, etc. who often do not receive their salaries on time, can also receive their salaries by direct deposit into their accounts at banks and post offices. It also recommends that a network of 10,00,000 interoperable microATMs operated by Business Correspondents will have to be set-up across the country for people to access their accounts at their own convenience. In order to set-up this network quickly, the Task Force has recommended that a last mile transaction fee of 3.14% with a cap of Rs.20 per transaction be paid by Government to banks for Government payments. This will also lead to positive network externalities such as reduction in leakages and achieving financial inclusion.In order to reduce the use of cash in the economy, the Task Force also recommends that Government and Government owned institutions accept electronic payments at all locations where they collect payments from citizens, without any additional surcharge. The Task Force also recommends that over a period of time, all payments of Government over the sum of Rs.1,000 should be made or received electronically. Transacting all Government business using electronic payments will help reduce graft, and bring about greater transparency and accountability.This reform will require a systematic platform-based approach to payments. For this the Task Force has  recommended the adoption of the following:

1. Government e-Payments Gateway (CGA): Enable straight-through processing and release of funds from Ministry of Finance to the Line Ministries;

2. Aadhaar account opening and authentication platform (UIDAI): Provides electronic account opening capability along with real-time authentication of residents;

3. Aadhaar Payments Bridge (NPCI): An interoperable system operated by NPCI for transferring funds into accounts at banks and post offices on the basis of Aadhaar number;

4. MicroATM network (Banks and India Post): An interoperable network of Business Correspondents deploying MicroATMs for balance query, deposits, withdrawals, and remittances; and

5. Mobile banking: Provide self-service banking capabilities through mobile phones for everyone. The Union Finance Minister accepted the Task Force Report in-principle and stated that necessary steps would be taken to implement the recommendations of the Report. The Task Force report is available on the Ministry of Finance website i.e. www.finmin.nic.in

DSM/SS/GN

Aadhaar-enabled payments to channel government transfers into interoperable electronic accounts, expanding access and reducing leakage. The report recommends converting government payments and receipts into an interoperable, Aadhaar-enabled electronic payments architecture: directing social-benefit and subsidy transfers into Aadhaar-linked accounts, mandating electronic payment acceptance by government entities without surcharge, and promoting electronic salary credits for frontline workers. It proposes a platform approach comprising a Government e-Payments Gateway for straight-through fund release, an Aadhaar account opening and authentication capability, an Aadhaar Payments Bridge for routing transfers to accounts by Aadhaar identifier, an interoperable MicroATM network for last-mile access, and mobile banking; and it recommends a government-paid last-mile transaction fee to incentivize access infrastructure.