e-payment System launched to enable Centre to Directly Credit Dues into Beneficiaries’ Account

Finance Minister Pranab Mukherjee on 31 October 2011 inaugurated a fully secure government e-payment system that will enable the Central government to directly credit dues into the accounts of beneficiaries.

Developed by the Controller General of Accounts (CGA) the GePG is a portal which enables successful delivery of payment services from Pay & Accounts Offices (PAOs) for online payment into beneficiaries' accounts in a seamless manner under a secure environment. The Government e-Payment Gateway (GePG) will use digitally signed electronic advice (e-advice).

The GePG has been designed to serve as middleware between COMPACT (computerised payment and accounts) application at PAOs and the core banking solution (CBS) of the agency banks/Reserve Bank of India, to facilitate paperless transaction. It will thus reduce the overall transaction cost and promoting green banking.

The system will usher in transparency and expedite direct payments from Central paying units with respect to subsidies to users and consumers of fertiliser, kerosene and cooking gas. Its efficiency and ease-of-use for all Ministries and departments will lead to an increased adoption of other e-services for online payment transactions. The e-payment system will save both time and effort in effecting payments and also facilitate the elimination of physical cheques and their manual processing.

Under the traditional system of government transactions, payments to employees and vendors are made through cheque, cash and demand draft or by Electronic Clearing Service (ECS) in a few Ministries. Ministries in the past few years used the RBI's facilities of Real Time Gross Settlement and National Electronic Funds Transfer to make payments through the banking channel.

Besides revolutionizing payments to individual beneficiaries, the government's e-payment gateway (GePG) - linking 1.3 lakh agencies down to the level of panchayats - has been developed to capture all data on receipt, payments, borrowings and deficit real time.

The government will borrow Rs 40000 crore-Rs-50000 crore less every year due to availability of real time data.
It will also help the Centre in more effectively channelizing plan expenditure on development schemes. The government spends nearly Rs 4 lakh crore every year on 140 centrally sponsored plan schemes and over 800 central sector schemes along with state schemes and additional central assistance. The new payment gateway will help monitor the entire disbursement.