The Government of India has launched the PM-eBus Sewa-Payment Security Mechanism (PSM) scheme, which introduces a Payment Security Mechanism Fund to support the procurement and operation of electric buses. This scheme is intended to reduce risks related to delayed payments and improve financial stability for original equipment manufacturers (OEMs) and operators that have entered into agreements with Public Transport Authorities (PTAs). Through this initiative, the government aims to provide financial security in the event of payment delays and create a structure for fund recovery from state governments or Union Territories (UTs) in cases where PTAs are unable to make timely payments.
The main goals of the scheme are to ensure consistent payment to operators, build capacity, support technology adoption for electric bus operations, and facilitate skill development for PTAs. This scheme targets the deployment of at least 38,000 electric buses, benefiting both PTAs and the operators under government-sponsored programs.
The eligibility criteria for PTAs to participate in the scheme include adopting the Gross Cost Contract (GCC) model for procuring e-buses, which aligns with the scheme guidelines. PTAs can also participate if they utilize a similar model approved by the steering committee. In addition, PTAs must have a Direct Debit Mandate (DDM) with the Reserve Bank of India, committing to replenish the scheme fund if needed. PTAs can aggregate and procure buses through Convergence Energy Services Limited (CESL), and if buses are procured independently, the PTA’s eligibility must be approved by the steering committee.
OEMs and operators who meet these criteria and hold concession agreements with eligible PTAs can benefit from the scheme. Payment security coverage will be provided for up to 12 years for each bus under the scheme, with a total financial outlay of ₹3,435.33 crore.
To access the scheme fund, PTAs must open an escrow account and process payments for regular invoices submitted by OEMs and operators. In case of insufficient funds, resulting in delayed or missed payments, the PTA will be deemed to be in default, allowing operators to request CESL to initiate the Payment Security Mechanism. CESL will manage a digital platform to receive and process these requests, ensuring operators have a secure and systematic way to access funds if payments are delayed.
Upon approval, CESL will disburse the approved funds from the scheme to the escrow account. PTAs are responsible for repaying any funds accessed from the scheme within 90 days of disbursement, along with a late payment surcharge (LPS) if there is a delay. The LPS will be calculated at an annual rate of 1% in addition to the State Bank of India’s three-year Marginal Cost of Funds-Based Lending Rate, compounded annually.
If PTAs fail to repay the scheme fund within the specified time, CESL will request the Reserve Bank of India to activate the Direct Debit Mandate. This would authorize the RBI to debit the respective state or UT account and transfer the required amount to the scheme fund, including any applicable late payment surcharge. This ensures that the scheme fund remains sustainable and provides consistent support to OEMs and operators.
CESL is designated as the implementing agency, responsible for overseeing the smooth functioning of the scheme. The agency will release detailed guidelines to ensure that all stakeholders follow the scheme procedures efficiently. Through these measures, the scheme intends to foster a reliable payment structure for electric bus operations, encouraging a broader transition to sustainable transport across India.
