Lok Sabha Question No. 324 (UNSTARRED), answered on 2017-02-03
Subject: E-Payments in Government Offices
Ministry: FINANCE
Asked by: K. GOPAL, VIJAYSINH MOHITE PATIL, A. ARUNMOZHITHEVAN

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF EXPENDITURE

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## LOK SABHA UNSTARRED QUESTION NO. 324

TO BE ANSWERED ON FRIDAY, THE 3 RD  FEBRUARY, 2017

14 MAGH 1938 (SAKA)

## E-PAYMENTS IN GOVERNMENT OFFICES

324: DR. K.GOPAL

## SHRI MOHITE PATIL VIJAYSINH SHANKARRAO SHRI A. ARUNMOZHITHEVAN

Will the Minister of Finance be please to state:

- (a). Whether the Government has asked its departments/offices of public sector firms  and  autonomous  bodies  to  encourage  their  employees  to  use  epayments/debit  cards  for  personal  transactions  to  boost  digital  payment economy and if so, the details thereof;
- (b)  Whether the Government has instructed its departments/offices to stop cash payments to vendors and contractors for amounts above Rs.5000 and if so, the details thereof;
- (c)  Whether  the  Government  has  asked  banks  to  promote  digital  banking  in mission mode to boost digital economy and if so, the details thereof; and
- (d). The  steps  taken/being  taken  by  Government  to  promote  e-payment  in  this regard?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

(a). Yes, the Department of Expenditure has issued an advisory to all Ministries/Departments  to  encourage  its  employees  to  make  use  of  Debit  Cards  for personal  transactions  instead  of  cash  vide  OM  No.  25  (30)/E.Coord/2016  dated  1 st December 2016. Given the progress made in banking technology, it is assumed that each  employee  would  be  in  possession  of  a  Debit/ATM  card  linked  to  his/her  bank account. Ensuring and encouraging government employees to maximise the usage of Debit  cards  for  personal  related  transactions  instead  of  cash  would  go  a  long  way serving  with  the  employees  serving  as  'ambassadors'  for  the  digital  push  and  also motivate, encourage the general public in taking up the cause. All Ministries/Departments  have  been  requested  to  encourage  their  employees  to  make use of Debit Cards for personal related transactions instead of cash. Ministries/Departments  should  liaise  with  their  accredited  banks  and  set  up  special camps to facilitate obtaining of and ensure that all its employees are in possession of

Debit Cards. Ministries/Departments may  also issue similar advisories to their attached/subordinate offices, PSUs, Autonomous Bodies etc.

- (b). Yes, the Controller General of Accounts, Department of Expenditure has issued instructions  to  all  Ministries/Departments  vide  OM.  No.  3  (2)  (1)/2016/  R&P Rules/Amendments/649 dated 5 th December 2016. Rs. 10, 000/- was the earlier threshold  limit  beyond  which  all  payments  to  suppliers,  contractors  etc.were made  through  e-payment  mode.    In  order  to  attain  the  goal  of  complete digitization of Government payments the existing limit of Rs. 10, 000/- has been lowered  to  Rs.  5,000/-  beyond  which  all  Ministries/Departments  shall  make payment to suppliers, contractors etc. through e-payment mode only.
- (c) & (d): The steps initiated by the Government to encourage digital banking in mission mode  and  the  other  measures  taken  to  promote  e-payment  is  provided  in Annexure - I .

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## Incentives to promote digital transactions:

To further accelerate the process of cashless transaction, the Central Government has decided on a package of incentives and measures for promotion of digital and cashless economy in the country. These include:

## (A)  Petroleum:

Nearly 4.5 crore customers buy petrol or diesel at such petrol pumps per day. It is  estimated  that  petrol/diesel  worth  Rs.1800  crore  is  sold  per  day  to  the customers, out of which nearly 20% was being paid through digital means. In the month of November 2016 it has increased to 40% and the cash transaction of Rs. 360 crore per day have got shifted to cashless transaction methods.

## Incentive on digital payment:

- o The Central Government petroleum PSUs shall give incentive by offering a discount rate of 0.75% of the sale price to consumers on purchase of petrol/diesel, if payment is made through digital means.
- o The  incentive  scheme  has  the  potential  of  shifting  at  least  30%  more customer to digital means which will further reduce the cash requirement of nearly Rs. 2 Lakh crore per year at the petrol pumps.

## (B). Expand digital payment infrastructure in rural areas:

- i. To  expand  digital payment  infrastructure in rural areas, the Central Government  through  NABARD  will  extend  financial  support  to  eligible banks  for  deployment  of  2  POS  devices  each  in  1  Lakh  villages  with population of less than 10,000.  These POS machines are intended to be deployed  at  primary  cooperative  societies/milk  societies/agricultural  input dealers to facilitate agri-related transactions through digital means. This will benefit farmers of 1 Lakh villages covering a total population of nearly 75 crore who will have facility to transact cashlessly in their village for their agri needs.
- ii. The Central Government through NABARD will also support Rural regional Banks and Cooperative Banks to issue 'RuPay Kisan Cards' to 4.32 crore Kisan  Card  holders  to  enable  them  to  make  digital  transactions  at  POS machines/Micro ATMs/ATMs.

## (C). Railways:

- i. Seasonal or Monthly Tickets: Nearly 80 Lakh passengers use seasonal or  monthly  ticket  on  suburban  railways,  largely  in  cash  spending  nearly Rs. 2,000 crore per year. As more and more passengers shift to digital means,  the  cash  requirement  may  get  reduced  by  Rs.1,  000  crore  per year in near future.

## Incentive on digital payment:

Railways through its suburban railway network shall provide incentive by way of discount upto 0.5% to customers for monthly or seasonal tickets from January 2017, if payment is made through digital means.

- ii. Free  Accidental  Insurance: Nearly  14  Lakh  railway  passengers  are buying  tickets  everyday,  out  of  which  58%  tickets  are  bought  online through digital means. It is expected that another 20% passengers may shift to digital payment methods of buying railway tickets.

## Incentive on digital payment:

All railway passengers buying online ticket shall be given free accidental insurance cover upto Rs. 10 Lakh. Nearly 11 Lakh passengers per day will be covered under the accidental insurance scheme.

- iii. Paid Services: For  paid  services  e.g.  catering,  accommodation,  retiring rooms etc. being offered by railways through its affiliated entities/corporations  to  passengers,  it  will  provide  a  discount  of  5%  for payment  of  these  services  through  digital  means.  All  the  passengers travelling on railways availing these services may avail the benefit.

## (D). General Insurance Policies:

## Incentive on digital payment:

Public Sector Insurance Companies will provide incentive by way of discount or credit upto 10% of the premium in general insurance policies and 8% in new  life  policies  of  Life  Insurance  Corporation  sold  through  the  customer portals, in case payment is made through digital means.

## (E). MDR Charges

The Central Government Departments and Central Public Sector Undertakings will ensure that transaction fee/MDR charges associated with payment through digital means shall not be passed on to the consumers and all  such  expenses  shall  be  borne  by  them.  State  Governments  are  being advised  that  the  State  Governments  and  its  organizations  should  also consider  to  absorb  the  transaction  fee/MDR  charges  related  to  digital payment to them and consumer should not be asked to bear it.

## (F). Ceiling on monthly rental for POS

- i. Public  Sector  banks  are  being  advised  that  merchant  should  not  be required to pay more than Rs. 100 per month as monthly rental for POS terminals/Micro  ATMs/mobile  POS  from  the  merchants  to  bring  small merchants on board the digital payment ecosystem.
- ii. Neary  6.5  Lakh  machines  by  Public  Sector  banks  have  been  issued  to merchants who will be benefitted by the lower rentals and promote digital transactions. With lower rentals, more merchants will install such machines and promote digital transactions.

## (G). Waiver of Service Tax

No  Service  Tax  will  be  charged  on  digital  transaction  charges/MDR  for transactions upto Rs. 2000 per transaction.

## (H). Digital Payment Incentives for Toll payments

For  the  payment  of  toll  at  Toll  Plazas  on  National  Highways  using  RFID card/Fast Tags, a discount of 10% will be available to users in year 2016-17.

Major  initiatives  taken  for  promoting  digital/cashless  payments  so  far  include  the following:

## (A). Rationalizing MDR/Transaction Fees:

- i. To encourage digital payments by citizens, Government departments have been advised  to  absorb  transaction  fees/MDR  associated  with  such  transactions  to

ensure  that  no  extra  burden  is  put  on  those  choosing  to  make  payments  by cashless means.

- ii. For purchase of fuel and petroleum products, consumers are not required to pay any transaction charge/fee for payment using Debit Card/digital means at CPSU fuel stations.
- iii. Discoms and State Governments have been persuaded to facilitate payment of electricity charges by consumers through digital means without any convenience fee/charge to consumers.
- iv. Merchant Discount Rate on Debit Card has been waived till 31/12/2016 in public interest. This is expected to encourage small merchants to deploy infrastructure (POS terminals) to accept digital payments.
- v. Customers  are  not  required  to  pay  Service  Charges  on  purchase  of  railway tickets through cards at railway ticketing counters for a limited period.

## (B). Strengthening Acceptance Infrastructure:

- i. Digital payments being accepted by over 70 Central Government departments through  various  electronic  modes  viz.,  netbanking,  debit/credit  cards,  prepaid cards, Interbank Mobile Payment Service (IMPS) recording more than 1.4 crore transactions worth Rs. 3250 crores.
- ii. Mobile Banking through interoperable ATMs has been launched; 81,000 ATMs of 12 Banks are already live and another 15,000 machines are expected to go live shortly.
- iii. All major 45 archaeological sites having maximum footfalls/tourists have started accepting digital payments covering more than 80% of the visitors.
- iv. To  popularise  digital  payments,  the  acceptance  infrastructure  is  substantially expanded  by  increasing  deployment  of  POS/mobile  POS  machines  from  14 Lakh to 25 Lakh by March 2017. A separate Task Force is closely monitoring the progress in this regard.
- v. To expedite card less and pin less banking RBI has notified mandatory Aadhar Enablement of all new Point of Sale terminals.
- vi. 5.5  Lakh  Fair  Price  Shops  are  being  equipped  with  micro-ATMs/POS  for undertaking digital payment transactions.
- vii. Electronic Toll collection system has been implemented in all Toll Plazas along with  the  facility  to  pay  by  credit/debit/prepaid  cards.  It  shall  be  expanded  to cover more lanes and wider network for distribution of Tags.
- viii. For  the  benefit  of  commuters,  standardized  interoperable  National  Common Mobility card is being developed.
- ix. 1000 ATMs installed  in  Post  Offices  have  been  permitted  to  be  interoperable with the banks.
- x. State Mission Directors of 33 identified smart cities have been issued advisories to  provide  for  adequate  deployment  of  digital  payment  infrastructure  while designing smart cities.

## (C). Digital Payments in Govt. Departments:

- i. To  enable  all  Central  Government  Departments  to  accept  digital  payments without passing associated charges to citizens a separate head of expenditure has been approved.
- ii. A  Non-Tax  Receipt  Portal  (bharatkosh.gov.in)  has  been  created  to  enable users/citizens  to  make  non-tax  payments  for  as  many  as  237  categories  of payments such as spectrum charges, RTI application fee, purchase of forms and magazines etc. online without going to banks or Government Offices.
- iii. All  Government  organizations,  Public  Sector  Undertakings,  Authorities  have been advised to review rules and regulations to support digital payments, adopt

cashless  payment  solutions  and  activate  payment  facility  through  the  pay.gov platform if they do not have such facility.

- iv. Salary disbursal in all  Central  Government departments is being done through PFMS and the platform is also used for disbursal of other funds/payments.

## (D). Rationalization of USSD charges

To  enable  mobile  banking  on  feature  phones,  USSD  charges  have  been rationalized and reduced from Rs. 1.50 per SMS to Rs. 0.50; an application for mobile phone payments (*99#) in four languages has been developed and the service providers have completely waived the charges for limited time.

## (E). Rolling out of UPI

To  facilitate  mobile  banking  on  smart  phones,  NPCI  has  rolled  out  Unified Payment  Interface  (UPI)  application  and  27  banks  have  already  released  the application to their customers.

## (F). Strengthening Business Correspondents Network

- i. More than 1,10,000 Business Correspondents (BCs) have been engaged by the Banks and Corporates in the country. These BCs are providing services at the door steps of the people in rural as well as in remote areas.
- ii. In a major fillip to rural banking 1,25,000 Gramin Dak Sewaks of Post Offices to work as Business Correspondents of Banks.
- iii. All geographical areas across the country have been mapped with Banks/Bank Mitras and dark/grey spots identified. Possibility of providing connectivity through VSAT and other means is being explored on priority.
- iv. For  ease  of  Direct  Benefit  Transfer  (DBT),  long  pending  issue  of  incentive compatible payments to Business Correspondents settled.

Besides above, the Hon'ble Prime Minister has also  announced certain incentives on 31 st December 2016. The proposals have also been announced in the Union Budget by the Hon'ble Finance Minister.

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