We have often come across cases of govt benefits not reaching the intending beneficiaries and, if they do, it takes ages to finally land in the bank account of the beneficiaries.
The same may not be the case in the future as the central govt has come up with an alternative that is a potentially realistic solution to address this issue with its recently launched E-RUPI. In this article, we take a look at what the e-RUPI is and its functions. Keep Reading to find out!
What is E-RUPI?
E Rupi(voucher) is a contactless, prepaid and electronic system for making payments. The concept is based on similar lines on which UPI functions.
It is created by the National Payments Corporation of India (NPCI) in association with the Department of Financial Services (DFS), National Health Authority (NHA), Ministry of Health and Family Welfare (MoHFW), and partner banks, who will be issuers of this e-vouchers.
The Prime Minister launched this digital payment system as a leak-proof and purpose & person-specific solution for various benefits that are provided for citizens by the govt.
How does the system work?
The underlying concept of this e-voucher is very much similar to that of UPI. But, the difference here is that it does not require any card nor does it require a mobile application or even the internet.
The digital token is sent via QR code or SMS string to the mobile of the beneficiaries. The emphasis is more on the utilization of the voucher for the intended purpose.
This is an alternative to direct bank transfer(DBT), which is based on bank account identification through mobile and other social security numbers.
Where it can be used?
The beneficiaries will be allotted digital vouchers to access welfare services where they can be utilized/redeemed after verifying with their mobile numbers and identity, which are linked with the vouchers.
The Prime Minister also said that the use of e-Rupi would gradually expand to other Direct Benefit Transfer(DBT) schemes going ahead. The pilot project for e-Rupi will be carried out for free vaccine delivery.
It can also be used by private individuals and entities for donations.
Why was E-RUPI required?
As we know that there are several welfare schemes carried out by state and central govt that cater to the marginalized sections of the society. But the matter of concern, for long, has been that of the medium through which the relief measures such as pensions and scholarships are provided.
Taking into consideration the limitations of access to banks, mobile phones, the internet, and lack of literacy, the govt had to come up with a system that is more user-friendly.
The result is e-Rupi, which essentially is seen as a way to spot potential gaps in the existing welfare payments infrastructure and fix them.
The need for such a payment system becomes all the more important at times like this, a pandemic when such a large portion of our population has been impacted by a locked-down economy.
Usefulness for rural India and MSMEs
The payment system can be most appreciated for those sections of the population for whom access to banks is limited, that is. Rural India, which houses most of the unorganized sectors, is the likely biggest beneficiary.
Especially in times of crisis, the delivery of benefits from govt becomes of paramount importance which can be addressed appropriately through e-Rupi.
Also, another important thing to be kept in mind is that e-Rupi does not require the beneficiary to have a bank account. Since the vouchers are prepaid, the user only has to ‘redeem’ them to get the benefits.
Challenges
There is also a grey area which needs to be addressed – not every person in the country will have a mobile phone. The number of mobile connections in India as of January 2020 is equivalent to 78% of the total population.
And during the period between January 2019 and January 2020, mobile connections dropped by 1.4%. Enabling roughly 22% of the population to get a mobile phone to access welfare services via e-RUPI will be a problem to be solved.
e-Rupi is NOT a digital currency
First things first – everything related to currency can only be coming from the RBI and not from the government. E-Rupi is a prepaid token or voucher backed by Indian Rupee and it is NOT transferrable to other persons.
Unlike cryptocurrencies, e-Rupi can’t be traded. Also, the issuer of the vouchers can track them and when it is used.
Banking Partners
Currently, 11 banks support e-RUPI, although there may be some that can issue, but not accept these e-vouchers.
Those that can both issue and receive e-RUPI include SBI, ICICI Bank, HDFC Bank, PNB, Axis Bank, and Bank of Baroda.
Issue-only banks include:
Canara Bank, Indusind Bank, Indian Bank, Kotak Bank, and Union Bank of India
Future Applications of e-RUPI
According to many industry participants, future applications of this potential game-changer digital payment system are immense.
The digital voucher can be utilized to manage the working capital gap of the MSMEs such as enabling them to make GST, PF, or ESI payments utilizing e-RUPI and hence, shortening the working capital cycle significantly.
Also, the government plans to let the service be usable to private entities so they can use it as a part of their employee welfare or benefits programs. The possible first implementation of e-Rupi is likely to be NHA’s(national health authority) PMJAY payouts.
In the coming days, beneficiaries could also it for food delivery, fertilizers, healthcare benefits, etc.
Final Thoughts
Most of the citizens living in urban areas, with every basic amenity within a radius of a few kilometers, will find this less relatable and can only read and study about it, fortunately.
The actual users, the underprivileged with remote medical facilities, and people with no bank accounts are the ones who will benefit the most from this new payment system. Happy Reading!
