Subsidies to be routed through EBT: FM

Tags: News

Direct transfer to beneficiaries will begin across 51 districts in 16 states effective Jan

The finance ministry has stepped up pressure on banks and state adminis­trations for expediting the mec­hanism of direct transfer of subsidy benefits to citizens and households.

The direct transfer to beneficiaries will begin acr­oss 51 districts in 16 states effective January 2013. Finance minister P Chidambaram said, the direct transfer of subsidies would be carried out through electronic benefit transfer (EBT). EBT is a system that allows the government to provide and track benefits to households or citizens directly through their bank accounts.

Speaking to reporters here on Tuesday, Chidambaram said, “Banks and state administrations have been fully sensitised about the launch of EBT.” State governments, he said, have been asked to include state schemes also in the EBT on a priority basis.

He added that the southern region states were better prepared for implementing the EBT mechanism. The states where project was expected to start include five districts in Andhra Pradesh, 3 in Karnataka, 2 each in Tamil Nadu and Kerala and one in the Union territory of Puducherry. The southern states were well ahead in the financial inclusion targets prescribed by the government, he said.

Chidambaram said, “The southern states are doing well in financial inclusion and loan disbursements to various sections.” At present, 61 per cent households in the southern region had bank accounts, against the all-India average of 58.7 per cent. The extension of banking service coverage and financial inclusion allowed for taking up EBTs on a larger scale. Direct transfer of subsidies to beneficiaries is estimated at Rs 3 lakh crore. The transfer through the EBT was expected to rise in the future, as more beneficiaries were included and financial inclusion coverage increased, he said.

The finance minister, however, declined to take questions on the state of the economy. Instead he said, “All questions should be confined only to the meeting of the southern region states.” He, however, said part of the “slowdown in the economy” lay on credit. Accordingly, he pushed increasing credit disbursement by banks. The quantum of credit to deposits in the southern states, including Union territories was 89 per cent as against all-India average of 77.8 per cent.

The meeting was attended by the Andhra Pradesh chief minister N Kiran Kumar Reddy, Karnataka CM Jagadish Shettar and Puducherry’s N Rangas­wamy. Tamil Nadu and Kerala were represented by their finance ministers O Pannerselvam and K M Mani.

Shettar had a litany of complaints against public and private sector banks. He said although Karnataka had signed memorandums of understanding with banks four years ago for implementation of EBT in the state, the banks were yet to fully step-up the initiative in the state.

Chidambaram also sought expeditious release of funds from states for recapitalisation of the regional rural banks. The KC Chakrabarty committee had recommended recapatilisation support of Rs 2,200 crore to the RRBs. RRBs are banking institutions jointly owned by public sector banks, state and central governments.

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