Direct Benefit Transfer – A blessing during the time of Pandemic
Direct Benefit Transfer or DBT has travelled a long path since its early initiation by Government of India on 1 January 2013 to change the mechanism of transferring cash subsidies and benefits.The program was aimed at transfer of subsidies and
delivering development schemes with the delivery of over 450 schemes to more than 900 million people through this mode. Since 2014, the government has disbursed a whopping Rs 8.22 lakh crore — close to 60 per cent of welfare and subsidies budget of the Union government — directly to the bank accounts of beneficiaries.
Components of DBT
Primary components in the implementation of DBT schemes include Beneficiary Account Validation System, a robust payment and reconciliation platform integrated with RBI, NPCI, Public & Private Sector Banks, Regional Rural Banks and Cooperative Banks (core banking solutions of banks, settlement systems of RBI, Aadhaar Payment Bridge of NPCI) etc.
Beneficiary Account Validation
These systems constitute workflow based systems for social sector Central Sector, Centrally Sponsored and State linked schemes and include functionalities such as application for scheme by beneficiary with details of bank account/Aadhaar, examination by scheme owners for eligibility of the beneficiary under scheme guidelines, initiate verification of bank account/Aadhaar, initiate payment through Fund Transfer Order, other MIS related functions etc. MNREGA, PM-AWAS, PM-KISAN, DBT-PAHAL etc. are some examples of such systems. While in many of the schemes, the payments are linked to Aadhaar, cases are also processed with bank account number, in case Aadhaar is not available.
Payment and Reconciliation
On the selection of valid beneficiaries, the Scheme IT systems initiate the payment by sending payment instructions to PFMS which in turn is routed to banks after necessary validation of beneficiaries. PFMS evolved as a robust payment and reconciliation platform integrated with 500+ banks for verification of bank account of beneficiary and for verification if Aadhaar seeding of bank accounts of beneficiary, with NPCI. This pre-validation of beneficiary account/Aadhaar linked bank, drastically brought down the failure of the payments as well as the delays in amount being available in the hands of beneficiary.
Core Banking Solutions: Banks being the last mile delivery channels, play a very critical role in the DBT process flow. As all account based payments are routed through the core banking channels, processing efficiency at this stage coupled with flow of reverse MIS imparted the desired momentum to the DBT programme.
Aadhaar Payment Bridge (APB)
Aadhaar Payment Bridge (APB) System, one of the unique payment systems implemented by NPCI, uses Aadhaar number as a central key for electronically channelizing the Government benefits and subsidies in the Aadhaar Enabled Bank Accounts (AEBA) of the intended beneficiaries. NPCI creates an Aadhaar mapper in order to facilitate the transfer of funds. This mapper is the backbone of Aadhaar Payments Bridge (APB) where information pertaining to the Banks seeded with the Aadhaar number is maintained in the mapper based on which NPCI routes payments to the destination Bank and credit accorded to the DBT beneficiary.
DBT during COVID-19
With the outbreak of the COVID-19 pandemic and the imposition of lockdown and social distancing norms, DBT emerged as a boon in providing succour and relief to millions of citizens whose livelihood was impacted. As the crisis loomed large, a lockdown was imposed by the Government for 21 days. The Public Financial Management System (PFMS) team took up the challenge during this adversity of facilitating smooth functioning of the financial machinery of the Govt. of
National Employment Guarantee Scheme (MGNREGS), National Social Assistance Program (NSAP), Prime Minster’s Matru Vandana Yojana (PMMVY), National Rural Livelihood Mission (NRLM), National Health Mission (NHM), scholarship schemes of various ministries through the National Scholarship Portal (NSP). In addition, states like UP, Bihar, Madhya Pradesh, Tripura, Maharashtra, Jammu & Kashmir, Andhra Pradesh also leveraged on the DBT platform of PFMS.
costs will be unbearably high. Economic instability will follow.” Whether DBT or cash transfer would be able to offset the economic damage caused by the COVID-19 pandemic is a subject of debate. DBT played a major role in sustaining life especially of the under-privileged segments of the society impacted by the COVID-19 crisis, helping millions in providing immediate relief in tiding over the turbulent period.
– Dipankar Sengupta, Deputy Director General, NIC