Lok Sabha Question No. 4105 (UNSTARRED), answered on 2022-03-28
Subject: Transaction Failures in AePS
Ministry: FINANCE
Asked by: Chinta Anuradha

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION No. 4105

Answered on Monday, March 28, 2022/ Chaitra 7, 1944 (Saka)

## Transaction Failures in AePS

## 4105. SHRIMATI CHINTA ANURADHA:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has taken any steps to decrease the rising rate of transaction failures in Aadhaar enabled Payment Services (AePS) and if so, the details thereof;
- (b) whether the Government is taking steps to reconstruct the consumer redressal process in the case of failed transactions, such as automated response codes to trigger reversal transactions, if so, the details thereof and if not, the reasons therefor;
- (c) whether  the  Government  has  taken  any  steps  to  regulate  the  rising  number  of  fraudulent Business Correspondents (BCs) stealing money from vulnerable customers through AePS, if so, the details thereof and if not, the reasons therefor;
- (d) whether the Government has undertaken measures to ensure that the money withdrawn by the BC is disbursed to the customer so verification is possible in case of an alleged fraudulent transaction; and
- (e) if so, the details thereof and if not, the reasons therefor?

## Answer

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (DR BHAGWAT KARAD)

(a)  Aadhaar  Enabled  Payment  System  (AePS)  is  a  bank  led  model  which  allows  online interoperable financial transactions in accounts including accounts of beneficiaries of Direct Benefit  Transfer  (DBT),  through  Business  Correspondents  (BCs),  using  Aadhaar  based biometric  authentication.  Banks  offer  this  service  to  their  customer  to  access  his/her respective Aadhaar enabled bank account and perform basic banking transactions like cash deposit, cash withdrawal, intrabank or interbank fund transfer, balance enquiry and obtain mini statement through a BC.

National  Payments  Corporation  of  India  (NPCI)  has  apprised  that  it  has  taken  various  steps  for reduction of declines as listed below:-

- (i) NPCI has a 24*7 technical support team including the Network team, which tracks incidents and assists the banks in the closure of the incident;
- (ii) NPCI escalates the matter to the Senior management of the Banks if they are having more than 1 lakh transactions declines per day;
- (iii) Technical Taskforce is created for all online products to help Banks to work towards reducing the technical declines.

Further, regular review is also done by Government periodically to contain the technical declines of AePS transactions.

(b) RBI vide its notification dated 20.09.20219 for 'Harmonisation of Turn Around Time (TAT) and customer compensation for failed transactions' has inter-alia advised Banks that wherever financial compensation is involved, the same shall be effected to the customer's account suo moto , without waiting for a complaint or claim from the customer. Further, customers, who do not get the benefit of redress of the failure as defined in the TAT, can register a complaint with the Reserve Bank Integrated  Ombudsman  Scheme,  2021.  Accordingly,  NPCI  has  apprised  that  the  TAT  has  been implemented for all online products including AePS.

(c) RBI has apprised that to strengthen the BC ecosystem they have prescribed the framework for development of Business Correspondent (BC) Registry Portal to Indian Banks' Association (IBA). The  BC  registry  portal  provides  a  centralized  repository  of  relevant  information  on  BCs,  which captures basic demographic details, concerned bank and corporate BC details, along with location of BCs, nature of operations, qualifications, gender, etc. In the event of malpractice/ frauds, banks have the option to blacklist BCs on the portal, details of which are made available to all the stakeholders.

Details  of  all  Business  Correspondents  (BCs)  blocked/blacklisted  are  consolidated  by  NPCI  and circulated periodically to all member banks for the benefit of the BC ecosystem.

(d) & (e) As per RBI's Master Circular dated 1.7.2014 on 'Branch Authorisation', banks are permitted to formulate a policy for engaging BCs with the approval of their Board of Directors. Further, the terms and conditions governing the contract between the Bank and the BC are required to be defined in written agreements subject to thorough legal vetting.

Vide the same circular, Banks have been advised to give due consideration to reputational, legal and operational risks associated with the engagement of BCs. The banks have also been advised to adopt technology-based solutions for managing the risk, besides increasing the outreach in a cost-effective manner.  The  transactions  should  normally  be  put  through  information  and  communications technology (ICT) devices (handheld device/mobile phone) that are seamlessly integrated to the Core Banking Solution (CBS) of the Bank. The transactions are accounted for on a real time basis and the customers receive immediate verification of their transactions through visuals (screen based) or other means (debit or credit slip).

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