The Finance Ministry has developed an e-payment system for direct credit of subsidies to consumers of fertiliser, kerosene and cooking gas.

"This system will bring transparency and expedite direct payments from central paying units relating to subsidies to the users and consumers...," the ministry said in a statement today.

The 'Government e-payment system' for direct credit of dues from the central government into the account of beneficiaries through the 'Government e-Payment Gateway' (GePG) has been developed by the Department of Expenditure.

Finance Minister Pranab Mukherjee will inaugurate the system on Monday.

In the wake of large scale diversion of subsidies, the government had announced it will move towards direct transfer of cash subsidy for kerosene, LPG and fertilisers.

A task force, under Nandan Nilekani, set up to work out the modalities for the proposed system of direct transfer of subsidy for kerosene, LPG and fertilisers, has submitted its interim report to the government.

The government proposes to implement the scheme by March 2012.

GePG is a portal which enables the delivery of payment services from Pay & Accounts Offices (PAOs) for online payment into beneficiaries' accounts in a "seamless manner under a secured environment".

It serves as middleware between COMPACT (Computerised Payment and Accounts) application at PAOs and the Core Banking Solution (CBS) of banks and the Reserve Bank of India to facilitate paperless transaction, reducing overall transaction cost and promoting green banking.

The e-payment system will not only save time and efforts but will facilitate elimination of physical cheques and their manual processing.

"The system will also have online reconciliation of transactions and efficient compilation of payment accounts," the statement added.

At present, cheque, cash, demand draft or in few ministries ECS for payments to employees and vendors are used.