Finance Ministry planning to double the Banks’ commission for DBT scheme from 1% to 2%

Finance Ministry is in the final stages of the course to double the commission to banks at 2% of the quantum of funds they transmit to individual beneficiaries under the government’s Direct Benefit Transfer (DBT) scheme. The current rate of commission is 1% per for every transaction under the DBT.
The government transfers money to the bank account of consumers of kerosene, LPG, etc. via its DBT scheme in order to do away with the loopholes and ascertain corruption free delivery. Now, the Finance Ministry plans that for all accounts, whether under Pradhan Mantri Jan Dhan Yojana or otherwise, if subsidy is routed via the DBT scheme, 2% of the total amount will be given to banks as administration cost. This money will not be cut from the consumer’s account but the government will spend extra 2%.
Example, if in a year, a bank transfers Rs 10 crore as DBT payments, then the government will transfer Rs 10.2 crore to that bank.
Banks play a very important role as Govt agents in routing subsidies via DBT Schemes.

Month: Current Affairs - September, 2014