The Union & Federal Governments, other state enterprises like Oil Marketing Companies run multiple benefit disbursal schemes like MNREGA, Social Security Pension, Old Age Pension as well as LPG subsidy etc. The benefits are transferred by a number of ways predominantly through cash & cheque and partly through electronic channels as part of e-governance initiatives in non-ubiquitous pockets across the country. A need was felt to develop a reliable and efficient payment mechanism to bring these financial benefits directly to the intended beneficiary, ensuring de-duplication and timely credit in the beneficiary account in an efficient and seamless manner. This resulted in a strong and compelling case to develop a payment system which can automate the existing Government disbursement mechanism and since Aadhaar number provides this uniqueness, beneficiary was chosen as the foundation.
Taking a lead on this, NPCI developed a centralized Direct Benefit Transfer (DBT) system, alternatively known as Aadhaar Payment Bridge (APB) System for channelizing the entitlements using Aadhaar number issued by UIDAI in an electronic manner by identifying the beneficiary and crediting the beneficiary bank account directly, once the Aadhaar number and the bank account number of the recipient are linked.
Implementation of a new payment scheme that ensures timely credit in beneficiary accounts in an efficient manner was the biggest challenge while ensuring at the same times that migration path is smooth and does not disrupt existing payment mechanisms. Moreover, the challenges inherent in the existing disbursal mechanism need to be overcome.
The design of a new system required a unique identification number which should be universally available with every beneficiary. The Aadhaar number provided an opportunity to uniquely map every Indian and to receive money directly in his/her bank account in a timely and efficient manner.
NPCI designed APB System for the disbursal of benefits using this unique Aadhaar number. This required a mechanism to centrally store the database of Aadhaar linked banks in the APB System and for this purpose, NPCI developed a centralized mapper. This mapper identifies the bank to which the Aadhaar number is mapped and based on this mapping; transaction is being routed to the beneficiary bank. The seeding or linking of bank account with Aadhaar number is internal to each bank and at no stage the bank account number of the beneficiary goes out of the bank's domain.
The implementation of the project also required judicious policy decisions at the highest levels as the span of impact was very large. Moreover, the speed and magnitude of implementation required synchronization at each step with concerned stakeholders in a calibrated manner to ensure adherence of the project timelines.
While designing the APB System, simplicity, low cost and ubiquity were the key considerations. Consciously, efforts have been made to minimize investments required at the banks' end. To reach out to every bank branch in the country, multiple routing options have been synthesized in the system to ensure that all bank branches and even post offices are covered.
Capability to support multiple file formats was created to reduce Go-to-Market dependency of the banks and to easily onboard the banks onto APB platform with minimal training at the bank's end to get started. To enhance operational efficiency, Aadhaar Vlookup facility was created on NPCI mapper to identify and map Aadhaar numbers on the NPCI mapper. This allowed banks to pre-check existence of Aadhaar numbers in NPCI mapper before initiating benefit transfer transactions. Also, online and simplified registration processes have been put in place for the banks and government institutions.
The uniqueness of the solution also lies in the fact that it provides a Dispute Management System (DMS) and makes available flexi MIS to the concerned stakeholders with options of scheme wise, district wise, bank wise, department wise etc. data extraction.
APB System has 3 primary pillars within the overall schema of the system to offer direct benefit transfer with common man at the bottom of the pyramid and bank institutions & State being the other 2 pillars.
The new APB System sub-serves the goal of Financial Inclusion by way of processing the government disbursements using Aadhaar numbers and supports the disbursal of various social welfare schemes like LPG Subsidy, MNREGA Payments, Social Security Pension, Old Age Pension, Scholarships etc. of the Central and other Federal Governments. This provides an opportunity to the State to attempt financial re-engineering of its subsidy management program.
The implementation of APB System will also lead to electronification of a large number of retail payment transactions and also made available an affordable payment mechanism to the banks that helped them reduce the paper work which is inherent in the existing system of cash and cheque based disbursal mechanism.
The inordinate delays, multiple channels, paper work also potentially gets eliminated with the implementation of the APB System. With APB System in place, beneficiaries get their subsidies and benefits in a timely and efficient manner with minimum hassles as compared to the existing system. This is helping in the transformation of millions of lives spread across the geography of the country.
The APB System is helping the Government and Government Agencies in plugging the leakages inherent in the existing disbursal mechanism thus helping the economy in saving millions of rupees.
The implementation of the APB project involved co-ordination with multiple stakeholders with different requirements in a wide ranging spectrum. The co-ordination with concerned stakeholders' including Government required strong relationship management at each and every step of the project. To overcome this, transparent, effective & speedy communication channels were established with all the stakeholders' including service providers. Scale and scope challenges during implementation put forth a lot of opportunities to refine the existing processes.
The earlier/existing payment mechanism used for the disbursal of benefits of various social welfare schemes had different challenges - time, spatial, processes and channels before the benefits could actually reach the intended recipients.
With the implementation of APB System, the benefits disbursal mechanism has become simpler, secure, efficient and practically more "Direct" in nature making the benefits available to the intended recipient on the same day. The new system has also resulted in making the processes seamless and efficient using the Information and Communication Technology infrastructure & Aadhaar number issued by UIDAI.
Uniqueness of the Project
The projects undertaken so far in the payments space had a limited scope with respect to geography, ministries, schemes and banks.
Aadhaar Payment Bridge is a centralised nationwide payment system. Aadhaar has re-usability and can be replicated across multiple segments and not restricted to government transfers alone. Multiple routing options ensure that every bank branch and post office in the country can be covered.
This project distinguishes itself from other payment systems because of the uniqueness of the concept used to reach out to millions of citizens of the country and the magnitude of efforts involved in co-ordination with the concerned stakeholders for the implementation of the project. This project touches the heart of every Indian in one or the other way and is already making its presence felt at every doorstep.