Study OAS · 11 May 2026

e-KYC Made Mandatory for Ration Purchase

What’s the News?

The Department of Civil Supplies, Puducherry, has made e-KYC registration mandatory for Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) beneficiaries to receive food subsidies through the newly launched Central Bank Digital Currency (CBDC) pilot project in the Union Territory. This replaces the earlier Direct Benefit Transfer (DBT)-Cash model.
Beneficiaries who fail to complete the e-KYC will become ineligible to receive the digital currency (e₹) for purchasing subsidised foodgrains.
The move aligns with the Targeted Public Distribution System (Control) Amendment Order, 2025, which mandates a nationwide e-KYC renewal for all ration card holders every five years.

Launch and Location: The pilot was inaugurated in Puducherry on February 26, 2026, by Union Minister Pralhad Joshi. It follows a similar pilot launched earlier in Ahmedabad, Gujarat.
Mechanism: The Reserve Bank of India (RBI) generates programmable digital coupons (e₹) that are credited directly into a beneficiary’s CBDC wallet, bypassing conventional bank accounts.
- The digital currency is purpose-bound, meaning it can be redeemed only for foodgrains at designated Fair Price Shops (FPS) or authorised merchant outlets.
- The e-wallet is valid for three months from the date of issuance.
Key Drivers:
- Leakage Prevention: The system is designed to address challenges related to biometric authentication failures and e-POS operational issues while ensuring secure, traceable, and real-time transactions.
- Entitlement Clarity: It operationalises the vision of “Every grain, Every rupee, Every entitlement” reaching the rightful beneficiary.

Process: PMGKAY beneficiaries in Puducherry who have not completed e-KYC must visit the nearest Common Service Centre (CSC) with their Aadhaar and ration cards. The e-KYC is completed free of cost.
Eligibility Gate: Only beneficiaries who have completed e-KYC will be eligible to receive the digital currency. Special camps are being organised in each constituency to facilitate the process.
Automatic Disqualification: Incomplete e-KYC blocks the flow of the digital subsidy, making it a critical compliance requirement for continued food security access.

Legal Backing: The Union Ministry of Consumer Affairs, Food and Public Distribution notified the TPDS (Control) Amendment Order, 2025, which came into force on July 22, 2025.
Key Provisions:
- Mandatory e-KYC for all eligible ration card households every five years to keep records current.
- Ration cards unused for six months will be temporarily disabled, with a field-level verification conducted within three months to determine eligibility.
- Restricts issuance of separate ration cards to individuals below 18 years of age and requires Aadhaar capture for children below five years.
- Introduces a First-In-First-Out (FIFO) method for new ration card issuance and mandates states to publish real-time waiting lists.

Terms & Definitions:
- Central Bank Digital Currency (CBDC): A digital form of sovereign currency issued by a central bank. In India, the digital currency is termed e₹ or the Digital Rupee and is distinct from private cryptocurrencies.
- Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY): A food security scheme providing free foodgrains to eligible beneficiaries under the National Food Security Act (NFSA). It was initially launched as a pandemic relief measure and later integrated with the regular NFSA provisions.
- Fair Price Shops (FPS): Licensed retail outlets under the PDS that distribute subsidised foodgrains and essential commodities to ration card holders.
- Common Service Centres (CSCs): Physical access points that deliver digital public services at the village and local level, forming a key pillar of the Digital India programme.
Related Policy Framework:
- One Nation One Ration Card (ONORC): Enables nationwide portability of ration cards, allowing beneficiaries to lift their entitled foodgrains from any FPS in the country. The CBDC pilot builds on these existing digital PDS reforms.
- Direct Benefit Transfer (DBT): A governance mechanism to transfer subsidies directly into beneficiaries' accounts to eliminate leakages and middlemen.
- National Food Security Act (NFSA), 2013: Provides the legal entitlement for subsidised foodgrains to a specified percentage of the population.