Bank help Gareeb Kalyan scheme

Banks ensure smooth withdrawals under the Gareeb Kalyan scheme on Day 1

Pradhamantri gareeb jan yojana

MUMBAI : The first day of the disbursal of cash aid through the PM Garib KalyanYojana went off smoothly as banks followed strict social distancing norms. On Thursday, an amount of ₹500 was credited to women accountholders of Pradhan Mantri Jan Dhan Yojana

Mint spoke to four bankers from four regions of the country – North India, South India, Eastern India and Western India.

Bankers said that two things worked in their favour and helped lessen the load at branches at a time when the direct benefit transfers (DBT) have started flowing in.

First, most of the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts getting ₹500 from Friday are serviced by business correspondent (BC) outlets in villages. Second, the decision to divide accounts into five sets based on the account numbers and mapped against five dates between 3-9 April has helped thin the crowd.

According to a banker from erstwhile United Bank of India, now part of Punjab National Bank, on day one, there were no reports of overcrowding from branches in West Bengal as more than half of the accounts are serviced by BCs.

“For instance, in West Midnapore district, around 78,000 accounts were eligible to withdraw money on Friday. Of this, 72,000 accounts that received money use business correspondent outlets instead of branches," said the banker from PNB cited above. The district, he said, has close to 600 BC points that service 120 customers on average.

A banker from Canara Bank working Bangalore Rural district also said that business corrrespondents are taking care of a large chunk of these withdrawals. The district has about 212 branches, 3.18 lakh PMJDY account holders and close to half of these belong to women who would get ₹500 per month under the government’s relief package.

“BCs are visiting households and delivering services at the doorstep. Moreover, there are other customer service points which customers can use to withdraw money without visiting branches," said the banker from Canara Bank.

Bankers also say that the awareness campaigns through different social media, radio and television have also helped disseminate information faster and wider.

A banker from Central bank of India said that queues were not that long, thanks to the staggered disbursal of loans. “In some pockets of Delhi and Hyderabad, we witnessed a larger crowd as there are more accounts in these branches. Also customers coming to withdraw pension and salary also added to the rush. With the help of police, we ensured that social distancing is maintained," he said.

Some other banks like Bank of Baroda had already taken precautions even before the disbursals started. This included incentivising BCs by giving extra cash to buy sanitiser, masks etc and also to ensure that outlets are kept clear. For BoB, nearly 50 lakh accounts of the two merged banks and Regional Rural banks, saw disbursements on day 1.

“Lot of awareness campaigns have been done which helped us in crowd management. Besides, the district administration and police have also helped. In some places like Rajasthan and Guwahati, the police came on their own to ensure customers keep the queue and use mask," said MV Murali Krishna, Head - Financial Inclusion and CSR, Bank of Baroda.

It might be too early to treat direct benefit transfers as a one-size-fits-all policy solution given the difficulties some Indians have in accessing cash.

The government of India last month promised a relief package of about $22.6 billion to weaken the blow from COVID-19. Direct Benefit Transfers (DBT) will be the mainstay mechanism of Pradhan Mantri Gareeb Kalyan Yojana’s disbursal announced as part of the package. As per a tweet by the Ministry of Finance on April 19, over $1.3 billion has already been deposited in the bank accounts of about 200 million women beneficiaries. Yet, with the coronavirus pandemic placing severe restrictions on people’s movement, and overstretching administrative capacities, the DBT machinery is likely to be tested. We explore the challenge of intended beneficiaries being able to safely access funds. 

A look at the DBT mechanism reveals its usefulness. Launched in 2013, DBT is new relative to other longstanding welfare programs and appears innovative in its use of e-governance measures. DBT transfers are usually in cash, in-kind, or in other forms such as honorariums and incentives (we will focus on cash-based transfers). As per the government’s website, in FY 2019-20, 427 schemes under 56 ministries made use of DBT (full list here). In total, $34 billion in funds were transferred via more than 4 billion transactions. During the country-wide lockdown, over $4.8 billion has been transferred (from March 24-April 17, 2020).  

DBT has been supported by both physical and technological mechanisms called “enablers.” The bulk of processes for cash transfers to the accounts of the eligible are digitized through the use of the Public Financial Management System (the standard operating procedure can be found here). However, while the transfer of money to the beneficiaries’ account is digital, the ultimate aim to ensure cash-in-hand is not. This is heavily dependent on at least two physical enablers: banks/ATMs/postal offices and bank correspondents. 

With the coronavirus pandemic, both have to observe strict hygiene measures and guidelines, which is proving to be difficult. For example, the first installment (of $6.60 for a total of about $20 split across three months) was transferred to about 200 million women Jan Dhan account holders in early April. A pernicious effect of the coronavirus crisis has been fear, and rumors about money meant for beneficiaries being returned or blocked led to anxious beneficiaries flouting physical distancing norms to withdraw funds. This was after the Department of Finance had reinforced the need to adhere to strict guidelines of maintaining distance, and measures such as staggering customer arrival.

Thus, DBT’s operational difficulties at the last mile have the potential to reverse gains made on health protection through its use. 

An alternative could have been DBT’s bank correspondents (also called Bank Mitras or business correspondents), particularly for beneficiaries who may not not be as mobile to travel or could be at higher risk of contracting COVID-19. Among them are senior citizens and people with disabilities, for whom the Union government’s relief package mentions a one-time payment of $13. As restriction on movement during the lockdown reduces the regular maintenance of cash supplies, especially in rural areas, the responsibility of turning monetary benefits to actual cash-in-hand has also fallen upon the estimated 120,000 Bank Mitras. These outsourced banking agents function as micro-mobile-ATMs allowing customers to withdraw money. However, they are facing several obstacles. 

Despite their services being classified as essential, reports suggest that they continue to face restrictions in movement and threat to personal security. Moreover, they rely on link bank branches but these branches are themselves rationing cash due to low availability. According to one estimate, only 30 percent of the Bank Mitras are functioning in rural areas, many of whom have little incentive to keep working. This is why the Business Correspondent Federation of India (BCFI) has suggested relief measures of up to $65 for three months for the bank correspondents to compensate them for working under difficult circumstances. To address the issue, public banks such as the Bank of Baroda have announced a transfer of about $26 to each active and functional Bank Mitra for the purchase of personal protective equipment such as sanitizers, masks, and gloves. They have also added a conditional $1.30 per day incentive to active Bank Mitras. 

But, for Bank Mitras to be the true connection at Indian doorsteps, the government will have to install a comprehensive plan for them.

In an extraordinary time such as what the country faces right now,  re-engineering the DBT system to match the crisis is urgent. Until then, it might yet be early to treat DBT as a one-size-fits-all policy solution.

20 cr women Jan Dhan Account holders to get Rs 500 per month for next 3 months: Sitharaman

Sitharaman announced that 20 crore women of Jan Dhan Account holders will get Rs 500 per month for next three months to help them run their households.

Finance Minister Nirmala Sitharaman on Thursday announced Rs 1.70 lakh crore Pradhan Mantri Gareeb Kalyan Yojana to help all those needy people whose livelihood has been hit hard due to the coronavirus lockdown in the country, especially the poor people. As part of the relief package, Sitharaman announced that 20 crore women of Jan Dhan Account holders will get Rs 500 per month for next three months to help them run their households. The finance minister made a number of announcements including free food for those who depend on daily earnings including labourers, construction workers, others.

Among other announcements, the government will provide relief to farmers affected due to the lockdown. The Centre on Thursday said it will transfer in the first week of April the first installment of Rs 2,000 to each of 8.69 crore beneficiaries under the PM-KISAN scheme. Announcing the relief measures within 36 hours of nationwide lockdown, Finance Minister Nirmala Sithraman said, "Farmers receive Rs 6,000 annual from PM-KISAN. We will now be giving the first installment of that as a front-loaded matter, so that at the beginning of the year they will get Rs 2,000". This will benefit immediately 8.69 crore farmers who feed 1.3 billion populatio

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