India’s Prime Minister Narendra Modi has launched e-RUPI, a voucher-based digital payment system, which could kickstart the government’s efforts to implement a central bank digital currency (CBDC) across the country.
e-RUPI, a one-time payment mechanism, is a cashless and contactless medium for digital payment, which can be in the form of QR code-based or SMS string-based e-voucher. Users can redeem the voucher at the service provider, without a card, digital payments app, or internet banking access.
Developed by the National Payments Corporation of India on its UPI platform, in collaboration with the Department of Financial Services, Ministry of Health & Family Welfare and National Health Authority.
This instrument is expected to be a revolutionary initiative in the direction of ensuring a leak-proof delivery of welfare services, it said.It can also be used for delivering services under schemes meant for providing drugs and diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertilizer subsidies etc, the PMO said.
The platform can also be used for delivering services under schemes meant for providing drugs and nutritional support under Mother and Child welfare schemes, TB eradication programmes, it said.
Modi said that the eRUPI voucher is going to play a huge role in making direct benefit transfer (DBT) more effective in digital transactions in the country and will give a new dimension to digital governance. This will help everyone in targeted, transparent and leakage free delivery. He said e-RUPI is a symbol of how India is progressing by connecting people’s lives with technology.
Nuts & Bolts of e-RUPI
Besides digitally connecting the sponsors of the services with the beneficiaries and service providers, e-RUPI assures timely payment without the intervention of an intermediary. Under NPCI’s UPI platform, both private and public sector banks will be onboarded as issuing entities.
Once that is done, these entities will be approached by various government agencies with specific beneficiary details, the payment purpose, and other information. Once the beneficiary has been identified using their mobile number, a voucher will be specifically generated and delivered to the said person for redemption.
Banks supporting e-RUPI are Axis Bank, Canara Bank, IndusInd Bank, Kotak Bank, Indian Bank, Union Bank of India, ICICI Bank, HDFC Bank, Punjab National Bank, State Bank of India.
e-RUPI aims to provide leak-proof delivery of welfare services like schemes related to providing drugs and nutritional support under Mother and Child welfare schemes, TB eradication programmes, drugs and diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertiliser subsidies.
e-RUPI is different from virtual currencies as it is backed by the Indian currency as an underlying asset. In an attempt to bridge the digital loophole, the government is planning to implement a central bank digital currency (CBDC) across the country.
Some central banks have taken drastic measures by creating their own digital currencies to rival the tech giants in the grim hope this will tighten their grasp on the economy. China is one of the largest economies leading the way by undertaking digital yuan trials,” opined Nitin Kumar, Chairman & Chief Executive Officer, Ligl.
The launch of CBDCs could change the world in different ways with impacts ranging from social issues, cannibalisation, security and privacy perspective.
“There are parts of the world where one still needs to travel hours for access to banks, ATMs, money transfer intermediaries, etc. CBDCs could create financial inclusion creating access for segments of society deprived,” pointed out Kumar.
Modi noted that in India, more than seventeen and half lakh crore rupees have been transferred directly to the accounts of the people via Direct Benefit Transfer. More than three hundred schemes are using DBT.
Around 900 million Indians are being benefited in some way or the other through in areas like LPG, ration, medical treatment, scholarship, pension or wage disbursal. Additionally, 1 lakh 35 thousand crore Rupees have directly been transferred to farmers under PM Kisan Samman Nidhi, 85 thousand crore rupees for government purchase of wheat were also disbursed in this manner.
“The biggest benefit of this all is that 1 lakh 78 thousand crore rupees were prevented from going to the wrong hands, ” added Modi.