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ABPS Mandatory for NREGS Payments with Possible Exemptions

Context:

The Aadhaar-based Payment System (ABPS) is now mandatory for National Rural Employment Guarantee Scheme (NREGS) workers’ payments. The government has indicated that exemptions may be considered on a “case-by-case basis.” The NREGS ensures a legal guarantee of 100 days of employment per financial year to adult members of rural households engaged in unskilled manual work at the statutory minimum wage.

Relevance:

GS II: Government Policies and Interventions

Dimensions of the Article:

  1. Aadhaar-enabled Payment System (AePS)
  2. ABPS Implementation for NREGS

Aadhaar-enabled Payment System (AePS)

Identity Verification and Banking Access:

  • AePS enables bank customers to use their Aadhaar number as their identity to access their Aadhaar-enabled bank accounts.
  • Customers can perform basic banking transactions using this service.

Basic Banking Transactions:

  • AePS allows customers to perform various banking activities, including:
    • Balance enquiry
    • Cash withdrawal
    • Remittances through a Business Correspondent.

Mandatory Requirements: To avail AePS, customers must meet the following criteria:

  • Possess a Bank Account with a Bank participating in AePS.
  • Link their Aadhaar to the respective bank account.

Biometric Authentication:

  • Transactions under AePS are completed using the customer’s biometric authentication.
  • This ensures secure and reliable access to banking services.
Objectives of AePS:
  • Aadhaar-based Identity Access:
    • Empower bank customers to use Aadhaar as their identity for accessing Aadhaar-enabled bank accounts.
  • Basic Banking Transactions:
    • Perform fundamental banking transactions, including cash deposits, cash withdrawals, intrabank or interbank fund transfers, balance inquiries, and obtain mini statements through a Business Correspondent.
  • Financial Inclusion Goals:
    • Support the objectives of the Government of India and Reserve Bank of India (RBI) in advancing Financial Inclusion.
  • Retail Payments Electronification:
    • Contribute to the RBI’s goal of electronification of retail payments.
  • Centralized Routing for Aadhaar Transactions:
    • Enable banks to route Aadhaar-initiated interbank transactions through a central switching and clearing agency.
  • Government Entitlement Disbursements:
    • Facilitate the disbursement of Government entitlements such as NREGA, Social Security pension, Handicapped Old Age Pension, etc.
  • Interoperability Across Banks:
    • Enable interoperability across banks in a safe and secured manner.
  • Foundation for Aadhaar-enabled Banking Services:
    • Build the foundation for a comprehensive range of Aadhaar-enabled banking services.

ABPS Implementation for NREGS:

ABPS Utilization Under NREGS (Aadhaar-enabled Payment System):

  • Implemented since 2017 under Mahatma Gandhi NREGS.
  • Links workers’ 12-digit Aadhaar numbers with job cards and associated bank accounts.

Expansion of ABPS for NREGS Beneficiaries:

  • Extended to beneficiaries under the scheme due to widespread Aadhaar availability.
  • Ensures safer and faster payment transfers through ABPS.

Aadhaar Seeding and Authentication Statistics:

  • Out of 14.33 crore active beneficiaries, Aadhaar has been seeded for 13.97 crore.
  • 81.89% of active workers are now eligible for ABPS, with 13.34 crore Aadhaar authenticated.

ABPS Implementation Details:

  • In July 2023, 88.51% of wage payments made through ABPS.

Mandatory ABPS for NREGS Workers:

  • Initially made mandatory from Feb 1, 2023, with extensions until Dec 31, 2023.
  • Mandatory ABPS implementation from Jan 1, 2024, with the mixed route of ABPS and National Automated Clearing House (NACH) for bulk payments.

Exemptions and Technical Issues:

  • Exemption consideration for gram panchayats facing technical or Aadhaar-related problems.
  • Decision on exemptions to be made on a case-by-case basis until the resolution of issues.

Government’s Response to Criticism:

  • Opposition parties criticize ABPS implementation as exclusionary.
  • Government may consider exemptions in case of technical issues.
  • Accusations of “weaponizing technology, especially Aadhaar.”

-Source: The Hindu


February 2024
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