The government has asserted that the Aadhaar Payments Bridge System (APBS) serves as the optimal method for disbursing wages to beneficiaries enrolled in the central Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) program. Nevertheless, recent research has unveiled noteworthy disparities between Aadhaar-based and account-based payment systems during 31 million MGNREGS transactions conducted across ten states. As a result of these findings, studies have recommended a reconsideration of the government's emphasis on promoting the Aadhaar Payment Bridge System (APBS) for such disbursements. In February, the rural development ministry made it obligatory for all MGNREGS wage systems to implement ABPS. Despite multiple deadline extensions, it has now been officially determined that ABPS will be compulsory starting from September 1, 2023.

How is Account Based Payment done?

In the case of account-based payments, funds are transferred to the worker's account through a process similar to NEFT bank transfers. However, the ABPS relies on Aadhaar as the worker's financial identifier, and its activation involves four essential steps. These steps encompass linking Aadhaar to a worker's job card, subsequently linking Aadhaar to the worker's bank account, and then mapping the worker's Aadhaar and the bank's institutional identification number with the National Payment Corporation of India Database. Sources have reported that ABPS payments have presented a range of challenges for workers, including instances where payments have been diverted to another account held by the same worker or misdirected to different account holders due to Aadhaar linking errors.

What is the Aadhaar Payment Bridge (APB) System? 

The Aadhaar Payments Bridge System (APBS) is a distinctive payment system orchestrated by the National Payments Corporation of India (NPCI). This system leverages the Aadhaar number as a central identifier to efficiently direct government subsidies and benefits into the Aadhaar Enabled Bank Accounts (AEBA) of the designated beneficiaries. APBS operates through the integration of Aadhaar numbers issued by UIDAI and the Institution Identification Number (IIN) provided by NPCI. It serves as a vital tool for government departments and agencies to facilitate the seamless transfer of benefits and subsidies as part of the Direct Benefit Transfer (DBT) scheme initiated by the Government of India.

What is the aim?

Based on consultations with multiple stakeholders, it has been determined that the Aadhaar Payments Bridge System, a payment system relying on the biometric-oriented Aadhaar personal identification program, will mitigate rejections and guarantee the punctual disbursement of wages to the designated beneficiaries participating in the employment guarantee scheme, as outlined in an official statement.