It could turn out to be the fourth pillar, further supporting JAM trinity initiative
Hari Hara Mishra | August 2, 2021
Today (August 2), prime minister Narendra Modi launched the e-RUPI voucher system which is another milestone in Digital India. Simply put, this will be a digital payment which will be delivered to mobile phones of beneficiaries, even with no bank account and this payment is like an e-Voucher in form of a SMS-string or a QR code. To start with, the government is expected to utilise this system for health services like drugs, and diagnostics under Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, other programmes like fertiliser subsidy and subsequently the usage will be extended to many direct benefit transfer schemes (currently around 300 DBT schemes are in operations). The first transaction today was made for payment towards the Covid vaccine in a private vaccination centre.
The e-RUPI is both cashless and contact less (meaning, no debit card/ credit card required). What is important is that the transfer is to a mobile number rather than to a bank account. Hence, this can be utilised even for unbanked population. The private sector can also use it for CSR activities. It will be a person-specific and purpose-specific payments system. Purpose specificity is an important tool to ensure the end use of funds transferred. For example, if the payment is released for textbooks, it can only be used for purchase of books and nothing else.
The platform has been developed by the National Payments Corporation of India (NPCI), Department of Financial Services, Ministry of Health and Family Welfare and National Health Authority. NPCI has already onboarded leading public sector and private sector banks like SBI, ICICI, HDFC Bank, Axis Bank, PNB, Bank of Baroda who will be the issuing entities. Any corporate or government agency will have to approach the partner banks, with the details of specific persons and the purpose for which payments have to be made. The beneficiaries will be identified using their mobile number and a voucher allocated by a bank to the service provider in the name of a given person would only be delivered to that person for the specified service only.
Because of Covid-19, contactless and digital payments have gained rapid acceptance and with increased smartphone usages, the volumes are likely to accelerate still further. The Reserve Bank of India has recently announced a digital payments index (RBI- DPI). The penetration of digital transactions is evidenced by the index at 270.59 as of March 2021, over a base of 100 as of March 2018. In three years, it has grown almost three times.
Digitalisation and fintech are the buzzwords for future. As indicated by the prime minister today, industry bodies, NGOs etc have displayed lot of enthusiasm for this product. Once this picks up momentum both in the government and private sectors, the velocity of e-RUPI will increase exponentially. This could indeed turn out to be the fourth pillar, further supporting JAM (Jan Dhan, Aadhar and Mobile) trinity initiative.
Mishra is a policy analyst and columnist.
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