Aadhaar Enabled Payment System (AePS) – Due Diligence of Touchpoint Operators – Draft Directions

## Report on RBI Draft Directions: Due Diligence of AePS Touchpoint Operators **1. Executive Summary:** This report analyzes the Reserve Bank of India's (RBI) draft directions on Due Diligence of Aadhaar Enabled Payment System (AePS) Touchpoint Operators. This is a *new policy* designed to enhance the robustness of AePS and protect bank customers from fraud, specifically identity theft and compromise of customer credentials. The key provision involves streamlining the onboarding process of AePS Touchpoint Operators and mandating due diligence. Feedback on the draft directions is solicited by August 31, 2024. **2. Introduction:** This report aims to provide an overview of the Reserve Bank of India's (RBI) draft directions on Due Diligence of AePS Touchpoint Operators, as outlined in the provided press release dated July 31, 2024. The analysis is based solely on the information contained within the provided text. **3. Policy Overview:** * **Core Objective(s):** Based on the provided text, the core objectives are to: * Enhance the robustness of the Aadhaar Enabled Payment System (AePS). * Protect bank customers from frauds perpetrated through AePS, specifically those involving identity theft or compromise of customer credentials. * Maintain trust and confidence in the safety and security of the AePS system. **4. Background and Rationale:** * **New Policy:** This is a new policy. The text suggests a growing concern about frauds occurring within the AePS framework. Identity theft and compromised customer credentials are cited as specific vulnerabilities. The rationale for the policy is the need to mitigate these risks and safeguard the financial interests of bank customers using AePS. **5. Key Provisions / Changes:** * **New Policy:** The key provisions established by the draft directions (as inferred from the press release) are: * **Streamlined Onboarding Process:** The onboarding process of AePS Touchpoint Operators will be streamlined. The details of this streamlining are not provided in the text but is likely to involve more stringent checks and balances. * **Due Diligence Requirement:** AePS Touchpoint Operators will be subject to due diligence measures. Again, the specifics of these measures are not detailed in the text, but it suggests a more thorough verification process for operators. * **Consultation Period:** The RBI is soliciting feedback on the draft directions. **6. Target Audience and Stakeholders:** The target audience and stakeholders directly affected by this policy include: * **AePS Touchpoint Operators:** They are directly affected by the streamlined onboarding process and due diligence requirements. * **Bank Customers:** They are the primary beneficiaries of the policy, as it aims to protect them from fraud. * **Banks and Financial Institutions:** These entities are indirectly affected as they operate and manage the AePS infrastructure. * **Reserve Bank of India (RBI):** As the regulatory body, the RBI is responsible for implementing and overseeing the policy. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Reserve Bank of India (RBI), specifically the Department of Payment and Settlement Systems, is responsible for overseeing the implementation. * **Timelines/Procedures:** * Feedback on the draft directions is requested on or before August 31, 2024. * Further timelines or procedures related to the actual implementation of the final directions are not specified in the provided text. **8. Expected Outcomes / Impact of Changes:** * **New Policy:** The likely intended outcomes of this policy are: * Reduced incidence of fraud within the AePS system. * Increased security and trustworthiness of AePS transactions. * Enhanced protection of bank customers' financial interests. * A more robust and reliable AePS infrastructure. **9. Conclusion:** The RBI's draft directions on Due Diligence of AePS Touchpoint Operators represent a proactive step towards strengthening the security and integrity of the Aadhaar Enabled Payment System. The policy is in response to concerns about rising instances of fraud, particularly those involving identity theft. By streamlining the onboarding process and mandating due diligence for AePS Touchpoint Operators, the RBI aims to protect bank customers and maintain confidence in the AePS platform. Stakeholders, particularly AePS Touchpoint Operators, are encouraged to provide feedback on the draft directions by the specified deadline.

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