Aadhaar Payments Bridge System (APBS)

Aadhaar Payments Bridge System (APBS)

Aadhaar Payments Bridge System (APBS)

This article covers “Daily Current Affairs” and the topic details “Aadhaar Payments Bridge System (APBS)”. The topic “Aadhaar Payments Bridge System (APBS)” has relevance in the Governance section for the UPSC CSE exam.

Relevance of the topic “Aadhaar Payments Bridge System (APBS)”:

For Prelims:
What is Aadhaar Payments Bridge System (APBS)?

For Mains:
GS 2: Governance
What is the significance of Aadhaar Payments Bridge System (APBS)?
What are the issues with Aadhaar Payments Bridge System (APBS)?
Way Forward

Why in the news?

In May 2023, around 88% of wage payments were made using ABPS.

What is Aadhaar Payments Bridge System (APBS)?

The Aadhaar Payments Bridge System (APBS) is a digital platform implemented by the National Payments Corporation of India (NPCI) in collaboration with the Unique Identification Authority of India (UIDAI). 

It is designed to facilitate the electronic transfer of government benefits and subsidies directly to the bank accounts of beneficiaries using Aadhaar, a unique 12-digit identification number issued to residents of India.

What is the status of ABPS?

According to NPCI data, the Aadhaar-enabled Direct Benefit Transfer (DBT) system has achieved a success rate of 99.55%.

Out of a total of 14.28 crore active beneficiaries, 13.75 crore Aadhaar numbers have been linked. Of these, 12.17 crore Aadhaar numbers have been successfully authenticated, with 77.81% being eligible for ABPS. 

What is the role of ABPS?

The APBS acts as a bridge between the government departments, banks, and beneficiaries by leveraging the Aadhaar infrastructure. It enables the seamless and efficient transfer of funds from the government to the intended recipients, eliminating intermediaries and reducing leakages and delays in the disbursement process.

How does the ABPS work?

  1. Enrollment: Individuals need to enroll for an Aadhaar number by providing their demographic and biometric information.
  2. Bank Account Linking: The beneficiaries link their Aadhaar numbers with their respective bank accounts. This enables the government to directly transfer funds to the beneficiary’s account.
  3. Mapping Beneficiaries: Government departments or agencies responsible for disbursing benefits create a database of beneficiaries and map them to their Aadhaar numbers.
  4. Fund Transfer: The government initiates the fund transfer process, specifying the Aadhaar numbers and the amount to be transferred. This information is sent to the NPCI.
  5. NPCI Processing: The NPCI receives the fund transfer requests and processes them. It validates the Aadhaar numbers and identifies the bank accounts linked to those numbers.
  6. Fund Transfer to Banks: The NPCI transfers the funds to the respective banks where the beneficiaries’ accounts are held.
  7. Crediting Beneficiary Accounts: The banks receive the funds and credit them to the beneficiaries’ bank accounts linked to their Aadhaar numbers.

What is the significance of the Aadhaar Payments Bridge System (APBS)?

  1. Direct Benefit Transfer (DBT): Facilitates direct transfer of government benefits and subsidies to beneficiaries’ bank accounts.
  2. Financial Inclusion: Links Aadhaar with bank accounts, promoting access to banking services for the unbanked population.
  3. Transparency and Accountability: Enhances transparency by reducing identity fraud and maintaining an auditable trail of transactions.
  4. Cost Savings: Reduces administrative expenses, corruption, and paperwork associated with physical cash disbursements.
  5. Efficiency and Convenience: Streamlines fund transfer processes, making disbursements faster and more efficient.
  6. Scalability and Reach: Leverages the vast Aadhaar database to reach a large population, even in remote areas.
  7. Promotes Digital Economy: Contributes to building a digital and inclusive economy by enabling efficient digital transactions.
  8. Government Schemes and Programs: Used for disbursing social welfare schemes, scholarships, pensions, and subsidies.
  9. Eliminates Intermediaries: Reduces leakages and delays by eliminating middlemen in the disbursement process.
  10. Improves Service Delivery: Ensures benefits reach intended recipients promptly, reducing delays and grievances.

What are the issues with Aadhaar Payments Bridge System (APBS)?

  1. Exclusion and dependency on Aadhaar.
  2. Privacy and data security concerns.
  3. Authentication failures and technical glitches.
  4. Exclusion of vulnerable sections.
  5. Lack of awareness and digital literacy.
  6. Dependence on internet and banking infrastructure.
  7. Fraud and misuse.

Way Forward

It is important to address these issues through continuous improvements, addressing privacy concerns, enhancing digital infrastructure, raising awareness, and providing alternatives for individuals who face difficulties with Aadhaar authentication. The goal should be to ensure that the APBS system is inclusive, secure, and reliable for all beneficiaries.

Source: https://www.pib.gov.in/PressReleseDetail.aspx?PRID=1929577

plutus ias current affairs eng med 3rd June 2023


Q.1  Which of the following statements best describes the Aadhaar Payments Bridge System (APBS)?

  1.  APBS is a platform for transferring funds between foreign banks and Indian banks.
  2.  APBS is a scheme aimed at providing free banking services to individuals below the poverty line.
  3.  APBS is a digital platform facilitating the direct transfer of government benefits and subsidies to beneficiaries’ bank accounts.
  4.  APBS is an initiative to promote digital literacy and provide training in financial management to rural communities.

Answer: (c)

Q.2 Consider the following statements about Aadhaar Payments Bridge System (APBS): 

  1. It enables the direct transfer of government benefits and subsidies to beneficiaries’ bank accounts.
  2. It is implemented by NPCI in association with UIADI.
  3. It is a platform for interbank transactions and fund transfers within India.

Select the correct answer from the code given below:

  1.  1 only
  2.  1 and 2 only
  3.  3 only
  4.  1, 3, and 4 only

Answer: (b)

Mains Question

  1. What are the advantages and limitations of implementing the Direct Benefit Transfer Scheme as a means to reform the government delivery system?
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