Digital Payments through PFMS - Facilitating digital inclusion and accelerating transformation to a 'Digital Economy'

Abstract

In his budget speech, the Finance Minister, stated that the year, 2011-12 would be a transition towards a more transparent and result oriented economic management system in India. The Government would take major steps in placing the administrative procedures concerning taxation, trade and tariffs and social transfers on electronic interface, free of discretion and bureaucratic delays. In furtherance of these objectives and in compliance with the provisions of the IT Act, along with other related laws and recommendations made by the Reserve Bank of India (RBI), the Public Finance Management System (PFMS) established itself as a safe, secure, efficient and robust payment platform for the Government of India (GoI). The system enabled the successful delivery of payment services from Government Treasuries and Program Implementing Agencies (PIA) into beneficiaries' accounts with the capability that the executive, legislature, internal and external audit, and the citizen access all financial transactions pertaining to government expenditures. The system has expedited direct payments from paying units to citizens, government employees, contractors and other entities receiving payments, in facilitating paperless transaction in a secure environment, reducing overall cost and promoting green banking. The digitally signed e-pay orders are processed by the accredited banks to credit the beneficiary accounts through a bouquet of electronic payment instruments viz. ICBS (Intra Core Banking Solution) / NEFT (National Electronic Fund Transfer) / RTGS (Real Time Gross Settlement), AEPS (Aadhaar Enabled Payment System), NACH (National Automated Clearing House), etc. The Ministry of Finance has taken a big leap forward, with PFMS poised to develop as one of the largest financial management systems in the world, which would be critical in bringing about transformational accountability and transparency in financial management, promoting good governance.