Context: A digital pipeline has been laid to provide the necessary financial assistance to the poor under the Pradhan Mantri Garib Kalyan(PMGK) Package.

More about the news:

  • A digital pipeline has been established through linking of Jan-Dhan accounts as well as other accounts with the account holders’ mobile numbers and Aadhaar [Jan Dhan-Aadhaar-Mobile (JAM)]. 
  • Jan Dhan Yojana (PMJDY) was launched in August, 2014 with an aim to provide bank accounts to unbanked persons.  
  • Out of around 126 crore operative current accounts saving accounts (CASA), more than 38 crore have been opened under PMJDY.

Purpose of creating digital infrastructure:

  • Enablement of interoperable, speedy and accurate transactions:
    • The bank accounts are enabled to carry out both cash and digital transactions at bank branches, Business Correspondent (BC) points, merchant locations and on the internet. 
    • Using biometric ID, highly cost-effective payments solutions like AePS/ Bhim Aadhaar Pay have been created both for banking services and for retail payments.

The Digital Payment Ecosystem includes the following modes:   

  1.  Aadhar enabled payment system(AePS):  helps in cash withdrawal by using Aadhaar authentication at branch/BC locations.
  2. Bhim Aadhaar Pay:  enables payment to merchants using Aadhaar authentication
  3. RuPay debit cards: As on 31 March 2020, a total of 60.4crore RuPay cards have been issued including 29 crore issued in PMJDY accounts. These cards could be used at ATMs for cash withdrawal and at Points of Sale (PoS)& e-commerce for digital payments.
    1. RuPay is India’s indigenous card scheme created by the National Payments Corporation of India.
  4. Unified Payment Interface(UPI): Immediate real time payment system which helps in both person to person (P2P) and Person to Merchant (P2M) transactions.
  5. Bharat Bill Payment System(BBPS): helps in payment of utility bills through internet & BC locations both by using cash & digital modes.

 According to the Union Finance Ministry, using the digital payment infrastructure mentioned above, more than 30 crore poor people have received financial assistance of Rs 28,256 crore under the Pradhan Mantri Garib Kalyan Package, in order to protect them from the impact of the lockdown due to COVID 19.


Digital Payment Infrastructure in India


  • Aadhaar has provided a solid foundation for banking to the unbanked, thus enabling financial inclusion of the people, poors in particular.
  • Aadhaar acted as an identity rail: Giving banks and Fintech companies a secure means to identify customers and the government and businesses an easy way to pay them.
  • About 1.2 billion Indians now have a digital identity. Aadhaar simply is one of the biggest depositories of biometric data in the world.

Unified Payment Interface (UPI)

  • NPCI along with the RBI and Indian Banks Association (IBA) has established a platform called UPI.
  • UPI is an umbrella platform that merges various banking services and features.
  • It allows real-time bank-to-bank payments to be made using a mobile number or virtual payment address (UPI ID), which is a unique identification for a bank account that can be used to send and receive funds.
  • Making the money transfer process a lot easier: 
    • As there is no need to remember the receiver’s account number, account type, IFSC, and bank name. 
    • Money  transfer can be made only by knowing Aadhaar number, mobile phone number registered with the bank account, or UPI ID.
  • UPI is acting as a payments rail, it gives those players access to infrastructure that enables the transfer of funds.
  • UPI provides a mobile-based, low-cost, 24/7, instant, convenient, interoperable, fintech friendly, inside banking, and safe payment experience.

National Payments Corporation of India (NPCI)

  • For creating a robust Payment & Settlement Infrastructure in India, NPCI  has been established under the initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
  • National Payments Corporation of India (NPCI) is an umbrella organisation for operating retail payments and settlement systems in India.
  • It has been incorporated as a not for profit company under the provisions of Section 8 of Companies Act 2013.


The PM Garib Kalyan package

It includes a range of measures that the Government of India will take to alleviate the economic, health, and food-related distress of India’s poor in the wake of the national lockdown to combat the spread of the novel coronavirus.

There are five elements to the PMGK package.

  1. Medical insurance cover of Rs 50 lakh for all health workers (doctors, paramedics, Asha workers etc.) treating patients.
  2. Help for the poor and those engaged in the unorganised sector.
  3. Help for the poor engaged in the organised sector.
  4. Help for construction workers.
  5. Use the money already available in the “district(-level) mineral fund” to pay for medical testing and screening for the coronavirus.

Pradhan Mantri Jan Dhan Yojana(Ministry of Finance)

Aims and objectives: It envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension.

About the scheme: 

  •  "Pradhan Mantri Jan-Dhan Yojana (PMJDY)" under the National Mission for Financial Inclusion was launched  on 28th August 2014.
  • PMJDY has provided a platform for the three social security schemes viz. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY) and Pradhan Mantri Mudra Yojana (PMMY).
  • Accounts can be opened in any bank branch or Business Correspondent (Bank Mitra) outlet. Accounts opened under PMJDY are being opened with Zero balance. However, if the account-holder wishes to get a cheque book, he/she will have to fulfill minimum balance criteria.
  • As informed by banks, out of 35.99 crore accounts opened under PMJDY as on 26.06.2019, 29.54 crore accounts are operative accounts.

Benefits under the scheme

  • Interest on deposit.
  • Accidental insurance cover of Rs. 2 lakhs
  • No minimum balance required.
  • The scheme provides life cover of Rs. 30,000/- payable on death of the beneficiary, subject to fulfillment of the eligibility condition.
  • Easy Transfer of money across India
  • Beneficiaries of Government Schemes will get Direct Benefit Transfer in these accounts.
  • After satisfactory operation of the account for 6 months, an overdraft facility will be permitted
  • Access to Pension, insurance products.
  • The Claim under Personal Accidental Insurance under PMJDY shall be payable if the Rupay Card holder has performed minimum one successful financial or non-financial customer induced transaction at any Bank Branch, Bank Mitra, ATM, POS, E-COM etc. 
  • Overdraft facility upto Rs. 10,000/- is available in only one account per household, preferably lady of the household.


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