National Payments Corporation of India (NPCI) has begun a pilot project to digitize the transactions in micro finance institutions (MFIs). The process has been initiated to bring payments to the last mile by digitizing transactions of Svatantra Microfinance wherein RBL Bank will be disbursing loans and HDFC Bank will be receiving the loan repayments.
A simple innovative use of the Aadhaar Payment Bridge System (APBS) and USSD-based *99# infrastructure has made this possible. The customers’ Aadhaar numbers are collected and sent to the disbursing bank for onward direct credit to the account using APBS, NPCI said in a press release.
For repayment a string of numbers viz. *99*1*4*1# is being saved as a contact number in the MFI customers’ feature phone during the MFI group meetings. The customer has to dial the contact, enter the amount and the Unified Payments Interface (UPI) PIN on the feature phone and the repayment gets done successfully.
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“The potential of such a system in the MFI sector itself for digitization of payments is as high as 80 million annual disbursements and over 900 million repayment transactions,” said A. P. Hota, MD & CEO, NPCI. NPCI has released a guide booklet titled ‘UPI & APBS Digitizing Microfinance – An NPCI Initiative’ for the same.
UPI comes up with the flexibility where you can choose to download the UPI application from any of the banks’ UPI app like SBI UPI, Axis UPI, HDFC UPI, etc. You can make multiple virtual addresses for doing various payments in different e-commerce websites. UPI is well equipped with payment system player (PSP). Multiple accounts of the same bank and the different bank can be linked through a single UPI application.
UPI has also come up with the variant feature of ‘collect’ where you have the option to receive instant payments or on a pre-defined date whenever you want the money in your account.