Standard Operating Procedure (SOP)

Modules for Direct Benefit Transfer (DBT)

DBT Mission
Cabinet Secretariat
 Website:
h p://cabsec.nic.in/dbt/origin.html
 CONTENTS
4 List of Abbrevia ons ............................................4

4 Sec on 1 - DBT Framework ............................................6

4 Sec on 2 - Classifica on of Schemes ...........................................9

4 Sec on 3 - Standard Opera ng Procedures

(SoPs) for DBT schemes ............................................11

4 Sec on 4 - SoP I: Cash Transfer from

Government to Individual Beneficiary ............................................14
Illustra ve example: MGNREGA ...........................................19

4 Sec on 5 - SoP II: In-kind transfer from

Government to Individual Beneficiary ...........................................20
Illustra ve example: Food PDS ...........................................26

4 Sec on 6 - SoP III: Other Transfers ............................................27

Illustra ve example: ASHA Workers
under JSY ............................................33

4 Sec on 7 - Architecture of Fund Transfer

under the DBT Framework ............................................34

3
 List of Abbrevia ons
A/C - Account NPCI - Na onal Payments
APBS - Aadhaar Payment Bridge Corpora on of India
System NSAP - Na onal Social Assistance
ASHA - Accredited Social Health Program
Ac vist OMMAS - Online Management,
BD - Beneficiary Database Monitoring and Accoun ng System
CAS - Common Applica on So ware PAHAL - Pratyaksh Hastantarit Labh
CBS - Core Banking Solu on PAO - Pay and Accounts Office
CHC - Community Health Centre PD - Program Division
DBT - Direct Benefit Transfer PDS - Public Distribu on System
DHS - District Health Society PFMS - Public Financial Management
DRD - Department of Rural System
Development PHC - Primary Health Centre
FMG - Financial Management Group PIP - Program Implementa on Plan
ICDS - Integrated Child Development PIU - Program Implemen ng Units
Services PMGSY - Pradhan Mantri Gram Sadak
IFD - Integrated Finance Division Yojana
IFSC- Indian Financial System Code Pr. AO - Principal Accounts Office
IT – Informa on Technology RGI - Registrar General of India
JSY - Janani Suraksha Yojana SC - Sub health Centre
MGNREGA - Mahatma Gandhi SFDA - State Forest Development
Na onal Rural Employment Agency
Guarantee Act SFT - Secure File Transfer
MIS - Management Informa on SOP - Standard Opera ng Procedure
System SRRDA - State Rural Roads
NACH - Na onal Automated Clearing Development Agency
House UC - U liza on Cer ficate
NAEB - Na onal Afforesta on and UIDAI - Unique Iden fica on
Eco-development Board Authority of India
NAP - Na onal Afforesta on Program ULB - Urban Local Body
NGO - Non Government Organisa on UT - Union Territory
NHM - Na onal Health Mission
NIC - Na onal Informa cs Centre

4
1. DBT Framework
 Direct Benefit Transfer (DBT) framework has a mul -stakeholder architecture which capitalises on the
competencies of various departments and ins tu ons to deliver benefits to beneficiaries in a mely and
effec ve manner. The figure below explains how different stakeholders work together to facilitate a
holis c environment for successful implementa on of DBT system.

Ministries & Departments IT Team

Iden fica on & Digi sa on of
authen ca on Beneficiary Database
of Beneficiaries
PFMS to act
as a pla orm
for DBT

$
Banks/
India Post/ UIDAI
Payment Banks RGI

PFMS as a Pla orm for DBT

Ul mate objec ve
Cash subsidies to be transferred directly to beneficiaries'
respec ve accounts and in-kind benefits to be delivered
directly to beneficiaries a er they have been duly authen cated.

Fig.1 Stakeholders Involved in DBT Framework

6
ROLES & RESPONSIBILITIES OF STAKEHOLDERS

1. Ministries/Departments
· Crea on of a DBT Cell to facilitate smooth transi on of different schemes to DBT.
. Examina on of all schemes to iden fy specific schemes and/or their components which are suitable for DBT.
· Iden fica on and authen ca on of beneficiaries for respec ve schemes.
· Maintenance of database containing scheme wise beneficiary details.
· Seeding of Aadhaar into beneficiary database.
· Crea on of payment files for disbursements to end beneficiaries.

2. IT Team of Ministry/Department
· Digi za on of verified beneficiary data
· Crea on and maintenance of real me MIS portal
· Timely update and maintenance of data

3. UIDAI/Registrar General of India

· Ensure Aadhaar enrolment
· Enable Bio- metric authen ca on to establish iden ty of individual

4. PFMS
Ÿ Facilitate mapping of schemes to bank accounts of different stakeholders by Program Divisions involved in
fund flow under various schemes.
Ÿ Verifica on of bank account details of beneficiaries by maker/checker using PFMS pla orm.
Ÿ Processing of payment files to the sponsor bank of Ministry/ State Department/ Implemen ng Agency for
disbursal of benefits:
a) For DBT payments by Ministry/Department- done by DDO/PAO of concerned Ministry/Department
b) For DBT payments by implemen ng agency- done by maker and payment authority of
Implemen ng Agency
Ÿ Sharing final payment response with the concerned Ministry/State Department/Implemen ng Agency within
the me limit as prescribed by banks.
Ÿ Establishment of reverse feedback loop to Ministries/Departments.
Ÿ Issue automa c U liza on Cer ficates (UC) to the Ministries/Departments which have u lised their funds
under a scheme.
Ÿ Provide training and hand-holding support to user departments.
Ÿ Dissemina on of informa on about payments to beneficiaries through SMS alerts based on reverse
informa on on credit success from Banks.

5. Banks/ Post Offices

Ÿ Opening of bank accounts/postal accounts/Jan Dhan accounts.
Ÿ Upda ng Beneficiary data (Upda ng bank account numbers and linking them with Aadhaar).
Ÿ Carrying out payments to beneficiaries' accounts within the prescribed me limits.
Ÿ Generating payment status response files with PFMS.
Ÿ Dissemina on of payment informa on to beneficiaries through SMS alerts about credit/debit of the fund
transfer under a scheme.

7
2. Classifica on of Government
Schemes/Components
To facilitate be er understanding of which scheme or component of scheme can be considered as DBT compliant,
and to spearhead the transi on process of schemes to DBT, the schemes/components can be classified into two
broad categories based on the type of benefit given to the beneficiaries:

I) Cash Transfer to Individual Beneficiary – This category includes schemes or components of schemes wherein
cash benefits are transferred by Government to individual beneficiaries. For example PAHAL, MGNREGA,
NSAP etc. This transfer of cash benefits from Ministry/Department to beneficiaries happens through
different routes as given below:

a) directly to beneficiaries (from Consolidated Fund of India)

b) through State Treasury Account to beneficiaries (from State Consolidated Fund)

c) through any Implemen ng Agency (as appointed by Centre/State Governments) beneficiaries

II) In-kind Transfer to Individual Beneficiary - This category includes schemes or components of schemes where
in-kind benefits are given by the Government to individuals through an intermediate agency. Typically, the
Government or its agent incurs internal expenditure to procure goods for public distribu on and to provide
services for targeted beneficiaries. Individual beneficiaries receive these goods or services for free or at
subsidised rates.

To cite an example, in Public Distribu on System (PDS), Food Corpora on of India (FCI) is the Government
agent responsible for procurement, movement, storage and distribu on of food grains to Fair Price shops.
FCI issues the food grains at subsidised rates, as fixed by the Government. The rates so fixed do not cover the
full economic cost incurred by the Corpora on. The difference represents the consumer subsidy for the PDS,
and is paid to the Corpora on by the Government of India. Similarly, Government incurs internal
expenditures for provision of in-kind subsidies on other products like kerosene, fer lisers, books, medicines,
vaccines, etc.

Other Transfers

This category includes transfers made in the form of honorariums, incen ves, etc. to community workers and
NGOs, etc. who are the enablers of government schemes for successful implementa on of the schemes. For
example - ASHA workers under NHM, Aanganwadi workers under ICDS, teachers in Aided School, Sanita on
staff in ULBs, etc. are not beneficiaries themselves but they are given wages, training, incen ves, etc. for
their service to the beneficiaries/community.

9
3. Standard Opera ng Processes
(SOP) for DBT Schemes
The process of direct benefit transfer to beneficiaries comprises various sub processes at different levels in the
overall structure. These sub processes include:

A.Preparatory Steps

B.Registra on on PFMS

C.Crea on of Beneficiary Database

D.Valida on of Beneficiary Details (for SOP I and SOP III) / Distribu on of in-kind benefits (for SOP II)

E.Payment and Feedback Loop

Sub processes A to D are enunciated for two scheme categories, namely Cash Transfer to Individual Beneficiary, In-
Kind Transfer to Individual Beneficiary and Other Transfers/Processes within the program design in Sec ons 5, 6 and
7 respec vely. The sub process 'Payment and Feedback Loop' listed at E is discussed elaborately in Sec on 8 tled
'Architecture of Fund Transfer Under the DBT Framework'. Sec on 8 is applicable only for SOP I and SOP III.

These sub processes are described with the help of a general process map below:

11
 SOP I:
CASH TRANSFER FROM GOVERNMENT TO
INDIVIDUAL BENEFICIARY

(A)
Preparatory Steps DBT Cell to identify DBT DBT Cell to develop IT based
Ministry/ Department to schemes or DBT components System/MIS, create a Grievance
create a DBT Cell of schemes and study process/fund flow Redressal Unit and train officials

(B)
Registered Ministry/Department to
Registration on PD to define hierarchy PD and Pr. AO to approve create PAO/DDO/CDDO, State
Ministry/Department/State
PFMS and components Department/Implementing and verify
Department to create treasury users,
Implementing Agency to create two users -Maker
of scheme Agency to register on PFMS registration and Checker on PFMS portal

(C )
Beneficiary
Database Ministry/Department/State Department/
Ministry/Department/State Ministry/Department/State Field functionaries of Ministry/Department/ Implementing Agency to upload
Creation Department/ Implementing
Department/ Implementing Agency State Department/ Implementing Agency to Bank/Postal account and Aadhaar
to digitise Beneficiary Database collect Bank /Postal A/c & Aadhaar details of beneficiaries on PFMS after manual/
Agency to identify beneficiaries (BD) after verification of Beneficiaries and seed Aadhaar in BD physical verification

(D)
Beneficiary's Data
and bank A/C PFMS to send Bank/postal A/c and
Banks and NPCI to share validation
response with PFMS and PFMS Ministry/Department/State Department/
Validation Aadhaar details of beneficiaries to to share the same with Ministry/
Department/State Department/
Implementing Agency to rectify
data for unvalidated beneficiaries
banks and NPCI for validation Implementing Agency and resend the same to PFMS

(E)
Payment & Refer to Section 8 – 'Architecture of fund flow under DBT Framework'
Feedback Loop

12
4. SOP I: Cash Transfers from
Government to Individual
Beneficiaries
 A. Preparatory Steps

Ministry/Department to create
a DBT Cell 1
Each Ministry/Department will create a DBT Cell which
will be headed by an officer not below the rank of Joint
Secretary and comprise of officials handling the DBT Cell to iden fy DBT schemes or DBT
iden fied Schemes, officials from Integrated Financial 2 components of schemes and study process/
Division (IFD), Officers from CCA/CA and IT experts fund flow
(NIC).
Responsibility of DBT Cell
Ministry/Department may consider outsourcing the IT
DBT cell will iden fy DBT schemes or DBT
solu ons as per requirements.
components of schemes and classify them in the
following categories.
DBT Cell to develop IT based System/
MIS, create a Grievance Redressal unit
and train officials
3 I) Cash Transfer from Government to Individual
Beneficiary
DBT cell will develop an IT based System U lity/MIS for
ii) Transfer In-kind from Government to Individual
its schemes that will provide a coherent centralized
Beneficiary
workflow engine for field func onaries, officials and
iii) Other Transfers/Processes
beneficiaries and enable report genera on, dynamic
update of data and daily tracking of progress. It should
DBT Cell will study the exis ng process flow and fund
also be compa ble with PFMS. The System U lity/MIS
flow under each scheme and reengineer the same
may be like NREGA-SOFT of Ministry of Rural
wherever necessary.
Development which will capture data at process
ini a on points and provide an intui ve user interface
in local Indian languages. Data once entered should be
usable in all subsequent opera ons to reduce data
duplica on and re-entry at different stages. The system
may be designed with func onal modules to enable
easy maintenance and provide space for all stake
holders for their share of work. Thus, each
Ministry/Department will have in place a
comprehensive System U lity/MIS for effec ve
monitoring, management and implementa on of
schemes. Process re-engineering may be undertaken to
simplify procedures wherever necessary.

DBT cell will cons tute a dedicated body to deal with

complaints and grievances of beneficiaries in a fair and
mely manner. The grievances may be pertaining to
various issues like delays in receiving subsidy amount in
the bank account of beneficiaries, incorrect or delayed
feedback, incorrect set of en tlements received by the
end beneficiary, etc. However, suitable grievance
redressal mechanisms need to be established at
different layers to address grievances pertaining to
various stakeholders in the system.

DBT Cell will train all stakeholders including officials of

States and UTs on usage of MIS.
DBT Cell may provide a user manual/guide and organise
workshops/seminars.

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 B. Registra on on PFMS

PD to define hierarchy and components

of scheme 1
PD will define hierarchy and components of Ministry/Department/State
each scheme on Public Financial Management
System (PFMS). This is a one- me ac vity to be
2 Department/Implemen ng agency
to register on PFMS
carried out for each scheme to ensure PD will register the concerned Ministry/
monitoring of flow of funds. Components may Department/State Department/
need to be configured each year, if required. In Implemen ng agency along with the details
case the hierarchy/components get changed of the sponsor bank. Alterna vely, the
for a par cular scheme, it is required that the concerned Ministry/Department/State
changes be incorporated for the next financial Department/Implemen ng agency can
year in advance. register itself through the link available on
home page of PFMS. Integrity of data
captured and veracity of bank
PD and Pr. AO to
approve and verify registra on 3 accounts/IFSC codes, etc. need to be
ensured.
PD will approve the registra on by verifying the
4
d e t a i l s f u r n i s h e d b y t h e Registered Ministry/Department to
Ministry/Department/State create PAO/DDO/CDDO, State
Department/Implemen ng agency at the me Department to create treasury users,
of registra on. The bank account details will be
Implemen ng agency to create two
verified using the PFMS-CBS interface.
users - Maker and Checker on
A er approval, PD will send a statement to Pr.
PFMS portal
AO via PAO acknowledging that it has verified The registered Ministry/Department will
the details, and the same may be accepted by create PAO/DDO/CDDO as users on the
Pr. AO. In case there are sub-agencies, the PFMS Pla orm. For State Department,
Ministry/Department/State treasury users will be created on PFMS.
Department/Implemen ng agency will Implemen ng Agency will get a login ID and
register the sub-agency(ies) whose bank password from the Ministry/Department
details will be approved post verifica on by the a er its registra on is approved on PFMS.
PFMS-CBS interface. The agency may create two users - Maker
and Checker/Authoriser. Maker will be
responsible for crea ng payment files for
beneficiaries (e-Sanc on) and
Checker/Authoriser will verify the payment
files. Checker/Authoriser will use PFMS
pla orm for approval of payment file by
providing digital signature. The Authoriser
will enrol Digital Signature on PFMS and
configure it. The Authoriser can also be the
PAO or State Nodal Officer. It is impera ve
that the Integrated Finance Division (IFD)/
PAOs, etc. also process or se le payment
files online.

15
 C. Beneficiary Database Crea on

Ministry/Department/State Department/
Implemen ng Agency to iden fy beneficiaries 1
Ministry/Department/State Department/
Implemen ng agency will iden fy beneficiaries for
e a c h s c h e m e . S tate / U T o ffi c i a l s o r fi e l d
func onaries will prepare beneficiary files as per Ministry/Department/State Department/
prescribed parameters/format provided by Public 2 Implemen ng Agency to digi se Beneficiary
Database (BD) a er verifica on
Financial Management System (PFMS).
Based on the beneficiary files,
Ministry/Department will digi se BD using MIS
Field func onaries of Ministry/Department/State which will have scheme-wise beneficiary details
Department/ Implemen ng Agency to collect Bank/
Postal A/c & Aadhaar details of Beneficiaries and
3 such as name, numbers, demographic details of
seed Aadhaar in BD
beneficiaries, etc. The beneficiary details will be
verified by concerned authori es (State Nodal
A er digi sa on of beneficiary database, trained Officer/ Ins tu ons etc.). Digi sa on of verified
State/UT officials or field func onaries will collect data may be carried out in the System U lity/MIS
t h e b a n k / p o s ta l a c c o u n t d e ta i l s o f t h e as per the prescribed e-Governance standards
beneficiaries and seed them in the database as per incorporated in NIC's Common Applica on
the parameters/format prescribed by PFMS. They So ware (CAS) provided to States/UTs.
will also collect the Aadhaar details of beneficiaries
and seed them in the database. One- me consent
of the individual beneficiaries for use of their Ministry/Department/State Department/
Aadhaar numbers may be obtained. Integrity of
data captured and veracity of bank accounts/IFSC
4 Implemen ng Agency to upload Bank/Postal
account and Aadhaar of beneficiaries on PFMS
codes, Aadhaar etc. need to be ensured.
Ministry/Department/State Department/
Implemen ng Agency will send/upload the
beneficiary files to/on PFMS for verifica on of
Bank/Postal account details and Aadhaar.
Obtaining meaningful data is essen al to reduce
the itera on for account valida on.

16
 D. Beneficiary’s Data and Bank A/C Valida on

PFMS to send Bank/postal A/c and Aadhaar

details of beneficiaries to banks and NPCI for 1
valida on
PFMS, through its automated processes, will
send beneficiary files to banks/ India Posts for
account valida on and Aadhaar details to NPCI Banks and NPCI to share valida on
for verifica on of Aadhaar. 2 response with PFMS

Ministry/ Department/ State Department/ Banks and NPCI will share the valida on
Implemen ng Agency to rec fy data for responses for the beneficiary files with PFMS.
unvalidated beneficiaries and resend the 3 These response files will contain informa on on
same to PFMS account holder's name as per record. PFMS will
Ministry/Department/State send these response files for all beneficiaries
Department/Implemen ng Agency will check (both for those whose details are validated and
the response files and rec fy beneficiaries' data not validated) to Ministry/Department/State
wherever required and send the rec fied files to Department/Implemen ng Agency.
PFMS again. Several rounds of data pushing may
occur ll data is 100% correct. This will con nue
ll data of all beneficiaries is accepted/
validated from Banks /NPCI. However, the
Ministry/Department/State
Department/Implemen ng Agency can s ll
prepare payment files for par al list of validated
beneficiaries.

17
 An Illustra ve Example of SOP I:
MGNREGS, Ministry of Rural Development

NREGA MIS/NREGA-soft developed by NIC

(A) team. The central team trains the State NIC
team who will act as master trainers for
Preparatory Steps District NIC team and District NREGA staff.
The District NIC team has trained Block
Central NIC team in Ministry of Rural Development
may be considered as the DBT Cell - Technical Identification of schemes by NREGA staff and Data entry staff. Feedback
Directors, Project coordinator, Officials of option on NREGA portal available for
NIC-DRD Informatics Cell, State/District NIC Centres
Ministry of Rural Development grievance redressal from all stakeholders

(B)
Registration on PD to define Approval of agency
Field functionaries appointed
PFMS hierarchy and Registration of by PD, verification
as Maker and Checker.
components of scheme agency on PFMS by Pr. AO

(C )
Beneficiary
Database Worker database maintained on Field functionaries collect Ministry sends Aadhaar + Bank a/c
Bank A/c and Aadhaar
Creation Beneficiaries NREGA-soft. Data entered is sent by
offline/ online mechanism to the details of workers and seed them
files of beneficiaries to PFMS after
verification by higher level field
identified central server at New Delhi. in the database officials

(D)
Beneficiary's Data
As MGNREGS entails payments to beneficiaries on a daily basis, validation of the Beneficiary's data and Bank Account
and bank A/C details are done by field functionaries themselves to save time. However, validation of beneficiary details including bank
Validation accounts are to be done through PFMS, as illustrated in the generic diagram on 'Processes for DBT' for 'Cash Transfers
from Government to Individual Beneficiary on page 9.

(E)
Payment & Refer to Section 8 – 'Architecture of fund flow under DBT Framework'
Feedback Loop

18
5. SOP II: In-Kind Transfers to
Individual Beneficiaries
 SOP II:
IN-KIND TRANSFER FROM GOVERNMENT
TO INDIVIDUAL BENEFICIARY

(A)
Preparatory Steps DBT Cell to identify DBT DBT Cell to develop IT based
Ministry/ Department to schemes or DBT components System/MIS, create a Grievance
create a DBT Cell of schemes and study process/ flow Redressal unit and train officials

(B)
Registration on PD to define hierarchy Ministry/Department/State PD and Pr. AO to approve
PFMS and components Department/Implementing and verify
of scheme Agency to register on PFMS registration

(C )
Beneficiary
Database Field functionaries of Ministry/Department/
Ministry/Department/State Ministry/Department/State State Department/Implementing Agency
Creation Department/ Implementing Department/ Implementing Agency
to collect Aadhaar details of Beneficiaries
to digitise Beneficiary Database
Agency to identify beneficiaries (BD) after verification and seed Aadhaar in BD

(D)
Distribution of
In-kind benefits Ministry/Department/State
Allocation of in kind benefits Department/Implementing Agency
Delivery of In-kind benefits to
to States/ UTs beneficiaries after authentication at
to develop mechanism for distribution of goods
PoS (preferably Aadhaar enabled)

20
 A. Preparatory Steps

Ministry/ Department to create

a DBT Cell 1
Each Ministry/Department will create a DBT Cell which
will be headed by an officer not below the rank of Joint
Secretary, and will comprise officials handling the DBT Cell to iden fy DBT schemes or DBT
iden fied schemes, officials from Integrated Financial 2 components of schemes and study process/
Division (IFD) and IT experts (NIC). fund flow
Ministry/Department may consider outsourcing the IT
Responsibility of DBT Cell
solu ons as per requirements.
DBT cell will iden fy DBT schemes or DBT
components of schemes and classify them in the
following categories.
DBT Cell to develop IT based System/
MIS, create a Grievance Redressal Unit
and train officials
3 I) Cash Transfer from Government to
Individual Beneficiary
DBT cell will develop an IT based System U lity/MIS for
ii) In-kind transfer from Government to
its schemes that will provide a coherent centralized
Individual Beneficiary
workflow engine for field func onaries, officials and
iii) Other Transfers/Processes
beneficiaries and enable report genera on, dynamic
update of data and daily tracking of progress. It should
DBT Cell will study the exis ng process flow and fund
also be compa ble with PFMS. The System U lity/MIS
flow under each scheme and re-engineer the same
may be like NREGA-SOFT of Ministry of Rural
wherever necessary.
Development which will capture data at process
ini a on points and provide an intui ve user interface
in local Indian languages. Data once entered should be
usable in all subsequent opera ons to reduce data
duplica on and re-entry at different stages. The system
may be designed with func onal modules to enable
easy maintenance and provide space for all stake
holders for their share of work. Thus, each
Ministry/Department will have in place a
comprehensive System U lity/MIS for effec ve
monitoring, management and implementa on of
schemes. Process reengineering may be undertaken to
simplify procedures wherever necessary.

DBT cell will cons tute a dedicated body to deal with

complaints and grievances of beneficiaries in a fair and
mely manner. The grievances may be pertaining to
various issues like delays in receiving en tlements,
incorrect or delayed feedback received by the end
beneficiary, incorrect set of en tlements received by
the end beneficiary, etc. However, suitable grievance
redressal mechanisms need to be established at
different layers to address grievances pertaining to
various stakeholders in the system.

DBT Cell will train all stakeholders including officials of

States and UTs on usage of MIS.

DBT Cell may provide a user manual/guide and organise

workshops/seminars.

21
 B. Registra on on PFMS

PD to define hierarchy and components

of scheme 1
PD will define hierarchy and components of Ministry/Department/State
each scheme on Public Financial 2 Department/Implemen ng Agency
to register on PFMS
Management System (PFMS). This is a one-
me ac vity to be carried out for each PD will register the concerned Ministry/
scheme to monitor the flow of funds. Department/State Department/
Components may need to be configured Implemen ng agency along with the
each year, if required. details of the sponsor bank. Alterna vely,
the concerned Ministry/Department/
State Department/Implemen ng Agency
PD and Pr. AO to can register itself through the link
approve and verify registra on 3 available on home page of PFMS.
Integrity of data captured and veracity of
bank accounts/IFSC codes, etc. need to
PD will approve the registra on by verifying be ensured.
the details furnished by the
Ministry/Department/State
Department/Implemen ng Agency at the
me of registra on. Bank account details will
be verified using the PFMS-CBS interface.

A er approval, PD will send a statement to

Pr. AO via PAO acknowledging that it has
verified the details and the same may be
accepted by Pr. AO. In case there are sub-
agencies, Ministry/Department/State
Department/Implemen ng Agency will
register the sub-agency(ies) whose bank
details will be approved post verifica on by
PFMS-CBS interface.

22
 C. Beneficiary Database Crea on

Ministry/Department/State Department/
Implemen ng agency to iden fy beneficiaries 1
Ministry/Department/State Department/
Implemen ng Agency will iden fy beneficiaries
for each scheme. State/UT officials or field
Ministry/Department/State Department/
func onaries will prepare beneficiary database
in a standard format, as decided by the DBT Cell of
2 Implemen ng Agency to digi se Beneficiary
Database (BD) a er verifica on
the Ministry/Department. Based on the beneficiary files,
Ministry/Department will digi se BD using MIS
Field func onaries of Ministry/Department/State
which will have Scheme-wise beneficiary
Department/Implemen ng Agency to collect
Aadhaar details of Beneficiaries and seed
3 details like name, numbers, demographic
Aadhaar in BD details of beneficiaries, etc. The beneficiary
details will be verified by concerned
A er digi sa on of beneficiary database, trained authori es (State Nodal Officer/Ins tu ons
State/UT officials or field func onaries will etc.). Digi sa on of verified data may be
collect the Aadhaar details of beneficiaries and carried out in the System U lity/MIS as per the
seed them in their bank accounts. One- me prescribed e-Governance standards
consent of the individual beneficiaries for use of incorporated in NIC's Common Applica on
their Aadhaar numbers may be obtained. So ware (CAS) provided to States/UTs.
Integrity of data about beneficiaries including
Aadhaar need to be ensured.

23
 D. Distribu on Of In-Kind Benefits

Alloca on of In-kind benefits to States/UTs

1
As per s pulated regula ons under each scheme,
the Central Government will allocate fixed
quan es of goods for public distribu on to
Ministry/Department/State Department/
States/UTs.
2 Implemen ng Agency to develop mechanism
for distribu on of goods
The Ministry/ Department/ State Department/
Implemen ng Agency will develop a robust
infrastructure/ mechanism to distribute goods
Delivery of In-kind benefits to beneficiaries a er
authen ca on
3 to channels/outlets from where they can be
easily delivered to the end beneficiary.

The beneficiary will approach the nearest outlet

and receive the en tled quan ty a er
authen ca on, preferably Aadhaar enabled, at
the point of sale/distribu on.

24
 An Illustra ve Example of SOP II:
Food PDS, Department of Food &
Public Distribu on

(A)
Preparatory Steps
Department of Food and Public DBT Cell to study process/fund DBT Cell to develop MIS for State/
Distribution to create a DBT cell flow of Food-PDS UTs, create Grievance Redressal Unit & train officials

(B)
Registration on
PFMS PD to define hierarchy Agency appointed for PD and Pr. AO
(proposed) and components of implementation of PDS to approve and verify
Food PDS to register on PFMS the registration

(C )
Beneficiary
Database
State/UT to identify Beneficiary database maintained on
Field functionaries to collect
Creation beneficiaries as per MIS. Ration Card (RC) details
Aadhaar details and seed them Regular review of RC details for
in the database updation by State/UT
eligibility to be digitised

(D)
Distribution of
Food Grains Food grains allocation to FCI to deliver food grains to
designated depots in States/ Fair Price Shops distribute
States/UTs
UTs and then to Fair Price Shops ration as per entitlement

Food grains delivered to beneficiaries

based on ration amount after PoS device to be installed at
authentication, preferably Fair Price Shops
Aadhaar based authentication.

25
6. SOP III : Other Transfers
 SOP III:
OTHER TRANSFERS

(A)
Preparatory Steps
DBT Cell to develop IT based System/
DBT Cell to identify DBT schemes or
Ministry/ Department to DBT components of schemes and MIS, create Grievance Redressal Unit and
create a DBT Cell study process/fund flow train officials

(B)
Registration on Registered Ministry/Department to
PD and Pr. AO to
PFMS PD to define Ministry/Department/State create PAO/DDO/CDDO, State
hierarchy and Department/Implementing approve and verify Department to create treasury users,
Implementing Agency to create
components of scheme Agency to register on PFMS registration two users -Maker and Checker on PFMS portal

(C )
Service
provider
Ministry/Department/State Department/
Database Ministry/Department/State
Ministry/Department/State
Department/Implementing Agency
Field functionaries of Ministry/Department/State
Department/Implementing Agency
Implementing Agency to upload Bank/
Department/ Implementing Postal account and Aadhaar of Service
Creation Agency to identify service providers
to digitise Service Provider Database to collect Bank/Postal A/c & Aadhaar details
of Service Providers and seed Aadhaar in BD
Providers on PFMS after manual/
(SD) after verification physical verification

(D)
Service Provider's
Data and bank PFMS to send Bank/postal A/c and Banks and NPCI to share validation response Ministry/Department/State Department/
with PFMS and PFMS to share the same with Implementing Agency to rectify data
A/C Validation Aadhaar details of Service Providers
Ministry/Department/State Department/ for unvalidated Service Providers and resend
to banks and NPCI for validation Implementing Agency the same to PFMS

(D)
Payment & Refer to Section 8 – 'Architecture of fund flow under DBT Framework'
Feedback Loop

27
 A. Preparatory Steps

Ministry/ Department to create

a DBT Cell 1
Each Ministry/Department will create a DBT Cell which
will be headed by an officer not below the rank of Joint
Secretary, and comprise officials handling the iden fied DBT Cell to iden fy DBT schemes or DBT
schemes, officials from Integrated Financial Division 2 components of schemes and study process/
(IFD) and IT experts (NIC). fund flow
Responsibility of DBT Cell
Ministry/Department may consider outsourcing the IT
solu ons as per requirements.
DBT cell will iden fy DBT schemes or DBT
components of schemes and classify them in the
following categories.
DBT Cell to develop IT based System/
MIS, create Grievance Redressal Unit
and train officials
3 I) Cash Transfer from Government to Individual
Beneficiary
DBT cell will develop an IT based System U lity/MIS for
ii) In-kind transfer from Government to Individual
its schemes that will provide a coherent centralized
Beneficiary
workflow engine for field func onaries, officials and
iii) Other Transfers/Processes
beneficiaries and enable report genera on, dynamic
update of data and daily tracking of progress. It should
DBT Cell will study the exis ng process flow and fund
also be compa ble with PFMS. The System U lity/MIS
flow under each scheme and re-engineer the same
may be like NREGA-SOFT of Ministry of Rural
wherever necessary.
Development which will capture data at process
ini a on points and provide an intui ve user interface
in local Indian languages. Data once entered should be
usable in all subsequent opera ons to reduce data
duplica on and re-entry at different stages. The system
may be designed with func onal modules to enable
easy maintenance and provide space for all stake
holders for their share of work. Thus, each
Ministry/Department will have in place a
comprehensive System U lity/MIS for effec ve
monitoring, management and implementa on of
schemes. Process re-engineering may be undertaken to
simplify procedures wherever necessary.

DBT cell will cons tute a dedicated body to deal with

complaints and grievances of beneficiaries in a fair and
mely manner. The grievances may be pertaining to
various issues like delays in receiving subsidy amount in
the bank account of beneficiaries, incorrect or delayed
feedback received by the end beneficiary, incorrect set
of en tlements received by the end beneficiary, etc.
However, suitable grievance redressal mechanisms
need to be established at different layers to address
grievances pertaining to various stakeholders in the
system.

DBT Cell will train all stakeholders including officials of

States and UTs on usage of MIS.

DBT Cell may provide a user manual/guide and organise

workshops/seminars.

28
 B. Registra on on PFMS

PD to define hierarchy and components

of scheme 1
PD will define hierarchy and components of Ministry/Department/State
each scheme on Public Financial 2 Department/Implemen ng Agency
to register on PFMS
Management System (PFMS). This is a one-
me ac vity to be carried out for each PD will register the concerned Ministry/
scheme to monitor the flow of funds. Department/State Department/
Components may need to be configured Implemen ng agency along with the
each year, if required. details of the sponsor bank. Alterna vely,
the concerned Ministry/Department/
State Department/Implemen ng Agency
PD and Pr. AO to can register itself through the link
approve and verify registra on 3 4 available on the home page of PFMS
website. Integrity of data captured and
veracity of bank accounts/IFSC codes,
PD will approve the registra on by verifying etc. need to be ensured.
the details furnished by the
Ministry/Department/State Registered Ministry/Department to
Department/Implemen ng Agency at the create PAO/DDO/CDDO, State
me of registra on. The bank account Department to create treasury users,
details will be verified using the PFMS-CBS Implemen ng Agency to create two
interface. users -Maker and Checker on PFMS
portal
A er approval, PD will send a statement to
Pr. AO via PAO acknowledging that it has The registered Ministry/Department will
verified the details and the same may be create PAO/DDO/CDDO as users on PFMS
accepted by Pr. AO. In case there are sub- Pla orm. For State Department, treasury
agencies, Ministry/Department/State users will be created on PFMS. Maker will
Department/Implemen ng Agency will be responsible for crea ng payment files
register the sub-agency(ies) whose bank for Service providers (e-Sanc on) and
details will be approved post verifica on by Checker/Authoriser will verify the
PFMS-CBS interface. payment files. Checker/Authoriser will
use PFMS pla orm for approval of
payment file by providing digital
signature. The Authoriser will enrol the
Digital Signature on PFMS and configure
it. The Authoriser can also be the PAO or
State Nodal Officer. It is impera ve that
the Integrated Finance Division (IFD)/
PAOs, etc. also process or se le payment
files online.

29
 C. Service Provider Database Crea on

Ministry/Department/State Department/
Implemen ng Agency to iden fy beneficiaries 1
Ministry/Department/State Department/
Implemen ng Agency will iden fy beneficiaries for
e a c h s c h e m e . S tate / U T o ffi c i a l s o r fi e l d
func onaries will prepare beneficiary files as per Ministry/Department/State Department/
prescribed parameters/format provided by Public 2 Implemen ng Agency to digi ze Beneficiary
Database (BD) a er verifica on
Financial Management System (PFMS).
Based on the beneficiary files,
Ministry/Department will digi se BD using MIS
Field func onaries of Ministry/Department/State
which will have scheme-wise beneficiary details
Department/ Implemen ng Agency to collect Bank/
Postal A/c & Aadhaar details of Beneficiaries and
3 like name, numbers, demographic details of
seed Aadhaar in BD beneficiaries, etc. The beneficiary details will be
verified by concerned authori es (State Nodal
A er digi sa on of Service Provider database, Officer/Ins tu ons etc.). Digi sa on of verified
trained State/UT officials or field func onaries will data may be carried out in the System
collect the bank/postal account details of the U lity/MIS as per the prescribed e-Governance
Service Providers and seed them in the database as standards incorporated in NIC's Common
per the parameters/format prescribed by PFMS. Applica on So ware (CAS) provided to
They will also collect the Aadhaar details of Service States/UTs.
Providers and seed them in the database. One-
me consent of the individual beneficiaries for use Ministry/Department/State Department/
of their Aadhaar numbers may be obtained.
Integrity of data captured and veracity of bank
4 Implemen ng Agency to upload Bank/Postal
account and Aadhaar of beneficiaries on PFMS
accounts/IFSC codes, Aadhaar etc. need to be Ministry/Department/State Department/
ensured. Implemen ng Agency will send/upload the
beneficiary files to/on PFMS for verifica on of
Bank/Postal account details and Aadhaar.
Obtaining meaningful data is essen al to reduce
the itera on for account valida on.

30
 D. Service Provider’s Data and Bank A/C Valida on

PFMS to send Bank/postal A/c and Aadhaar

details of beneficiaries to banks and NPCI for 1
valida on
PFMS will send beneficiary files to banks/posts
for account valida on and Aadhaar details to
NPCI for verifica on of Aadhaar. Banks and NPCI to share valida on
2 response with PFMS

Ministry/ Department/ State Department/ Banks and NPCI will share the valida on
Implemen ng Agency to rec fy data for responses for the beneficiary files with PFMS.
unvalidated beneficiaries and resend the 3 These response files will contain informa on on
same to PFMS account holder's name as per record. PFMS will
Ministry/Department/State send these response files for all beneficiaries
Department/Implemen ng Agency will check (both for those whose details are validated and
the response files and rec fy beneficiaries' data not validated) to Ministry/Department/State
wherever required and send the rec fied files to Department/Implemen ng Agency.
PFMS again. Several rounds of data pushing may
occur ll data is 100% correct. This will con nue
ll data of all beneficiaries is accepted/
validated from Banks /NPCI. Step D.1 repeats.
However, the Ministry/Department/State
Department/Implemen ng Agency can s ll
prepare payment files for par al list of validated
beneficiaries.

31
 An Illustra ve Example of SOP III:
ANGANWADI WORKERS (AWW)/ANGANWADI HELPERS
INTEGRATED CHILD DEVELOPMENT SERVICES (ICDS)
Ministry of Women and Child Development

(A)
Preparatory Steps Creation of DBT Cell in Identification of JSY
Ministry of Women & DBT Cell to develop an
scheme by Ministry of
Child Development MIS and train officials
Health and Family Welfare

(B)
Registration on
Agency to create two users -Maker
PFMS PD to define hierarchy Registration of Agency Approval of Agency by PD, and Checker. Maker can be State
and components of ICDS verification by Pr. AO Program Officers/District Program
on PFMS Officers/Block CDPO

(C )
Service providers'
Database Creation Digitise AWWs'
Collection of
Identification of AWWs Bank A/c/Postal A/c + Send Aadhaar + Bank/Postal
database after verification
Aadhaar details a/c to PFMS after verification

(D)
Service Provider's
Data and bank Verification of A/c Rectification of AWW's
A/C Validation and Aadhaar details Identification of discrepancies data and resending
for validation in name and A/c of AWWs to PFMS

(E)
Payment & Refer to Section 8 – 'Architecture of fund flow under DBT Framework'
Feedback Loop

32
7. Architecture of Fund Transfer
Under the DBT Framework
Almost all schemes of the Government of India involve transfer of benefits, in either cash or kind to the iden fied
beneficiaries. This necessitates the flow of funds from a parent Ministry/Department to the beneficiaries through
different routes. A structured and well- defined fund transfer mechanism is thus, important to ensure not only the
successful implementa on of schemes on the DBT pla orm, but also compliance with accoun ng requirements.

The previous sec ons 5, 6 and 7 focussed on the DBT processes to be established. This sec on explains the fund
flow mechanism to be followed under DBT. It is to be observed that this fund flow mechanism is par cularly
applicable to schemes involving Cash Transfers to Individual Beneficiaries (SOP I) and Other Transfers to enablers of
Government schemes (SOP III). With regard to In-Kind Transfers (SOP II), the Ministry/Department must ensure that
fund transfers, if any, at various levels are captured on the PFMS pla orm, while disbursement of In-kind benefits to
beneficiaries is done post authen ca on, which preferably should be Aadhaar enabled.

In general, there are three different routes through which fund transfers can take place under various schemes, viz.

I. Fund transfer from parent Ministry/Department to the accounts of beneficiaries directly e.g. MGNREGS,
scholarships by different Ministries/Departments.
ii. Fund transfer through State Treasury Account to beneficiaries, for e.g. old age pension in UP.
iii. Fund transfer through any implemen ng agency (as appointed by Centre/State Governments) to beneficiaries.
For e.g. Schemes of the D/o Sports through SAI, Scholarships of the D/o Higher Educa on through UGC.
Implemen ng agencies may also include Special Purpose Vehicles (SPVs) created by Ministries/Departments for
disbursement of benefits (in cash or kind) to intended beneficiaries.

The architecture of fund flow process under the DBT framework is illustrated in the diagram below followed by a
detailed descrip on of each step.

34
 ARCHITECTURE OF FUND TRANSFER UNDER
THE DBT FRAMEWORK

(E)
Payment & Authorizer appointed by Ministry/
Maker of Ministry/Department/State Department/State
Feedback Loop Department/Implementing Agency Department/Implementing Agency PFMS to validate and send payment files
to create payment files after verification to approve the payment files to the corresponding sponsor bank of Ministry/
and place on PFMS and digitally sign them on PFMS Department/State Department/Implementing Agency

All transactions to be routed through NPCI.

All Aadhaar based transactions to Non Aadhaar based transactions

be routed through NPCI's APBS to be routed through NPCI's Bank of Ministry/Department/
Amount transferred to all (Aadhaar Payment Bridge NACH (National Automated
State Department/Implementing
individual accounts of System) Clearing House)
Agency to transfer payments to
beneficiaries beneficiaries' accounts

Feedback Bank of Ministry/Department/ PFMS to share the payment response I) Feedback to beneficiaries
State Department/Implementing through SMS alerts-credit/debit
Loop file status with respective Ministry/
information by corresponding Bank
Agency to share payment status Department/State Department/ ii) Scheme wise information
response file with PFMS Implementing Agency by PFMS/PD

Your bank account

credited for PDS
Subsidy on 03 May
2016 for Rs. 120.25
for the period
01 May 2016 to
Payment for failed transactions to 31 May 2016.

be re-initiated by Ministry/Department/ Screenshot of SMS alert

State Department/Implementing Agency from PFMS to beneficiary
after rectification. Repeat Steps 1 to 6.

35
 E. PAYMENT & FEEDBACK LOOP
Maker of Ministry/Department/
State Department/Implemen ng Agency
to create payment files a er verifica on
and send to PFMS
1 Authoriser to approve the payment files
2 and digitally sign them on PFMS
Maker appointed by Ministry/Department/State
Department/Implemen ng Agency will create Authoriser will verify and approve the payment
payment files on PFMS for beneficiaries and send files by digitally signing either through Ministry
them to Checker using PFMS with or without digital Portal interfaced with PFMS or or directly on
signature. The payment files will be processed in PFMS. In case of any error or inaccuracy in the
mul ple batches. payment files, the Authoriser will reject the en re
payment file (batch) by ci ng the appropriate
reason from the drop down list of reasons for
PFMS to validate and send payment files rejec on. There can be mul ple Authorisers for
to the corresponding sponsor bank of 3 approval of payment.
Ministry/Department/State Department/ Bank of Ministry/ Department/ State
Implemen ng Agency Department/Implemen ng Agency to
Once approved and digitally signed by the transfer payments to beneficiaries'
Authoriser, the payment files will be sent by PFMS accounts
t h ro u g h a n a u t o m a t e d p ro c e s s t o t h e
corresponding sponsor bank of
4 Amount will be debited from the sponsor bank of
Ministry/Department and beneficiaries' bank
Ministry/Department/State accounts will be credited through the appropriate
Department/Implemen ng Agency. payment bridges.

All transac ons to be routed through

NPCI 5 Bank of Ministry/Department/State
Department/Implemen ng Agency to share
payment status response file with PFMS
The sponsor bank will route all transac ons
through NPCI. All Aadhaar based transac ons will Through an automated process, the sponsor bank
be routed through Aadhaar Payment Bridge
6a of Ministry/ Department/ State Department/
System (APBS) of NPCI and all non-Aadhaar based Implemen ng Agency will share the payment
transac ons will be routed through Na onal status response files with PFMS.
Automated Clearing House (NACH) of NPCI. On-us
and off-us transac on charges laid down by NPCI 6b PFMS to share the payment response file status
will be accounted for. An On-us (intrabank) with respec ve Ministry/ Department/ State
transac on is one where an Aadhaar ini ated Department/ Implemen ng Agency
transac on has effects only in accounts within one
and the same Bank and does not necessitate an PFMS will then share the payment status response
interbank se lement. An Off-us (interbank) files with Ministry/ Department/ State
transac on is one where there is movement of Department/Implemen ng Agency. These
funds from one Bank to another necessita ng an response files will contain the details of successful
interbank se lement. and failed transac ons along with reasons for the
failure. This informa on on payment status will also
be readily available in PFMS reports on DBT.
Payment for failed transac ons to be
re-ini ated by a er rec fica on. Steps 1 I) Feedback to beneficiaries through SMS
to 6 repeat. alerts-credit/debit informa on by
Payment for failed transac ons will be re-ini ated
6c corresponding Bank ii) Scheme wise
informa on by PFMS/PD
by the Ministry/Department/State
Establishment of feedback loop has to be an
Department/Implemen ng Agency a er carrying
out the required modifica on / rec fica on. The
7 integral part of the IT pla orm. Feedback will be
whole process from Steps 1 to 6 will be repeated. given to the beneficiaries through SMS alerts
The above men oned Steps 1 to 6 can be further regarding transac on by corresponding bank.
elucidated for each of the three routes of fund Scheme wise payment amount details will be
transfer, the details of which are explained below. in mated to beneficiaries by PFMS/Program
Division through SMS. Reverse informa on loop
i)Directly from Ministry/Department to on failed/successful transac ons will be
beneficiaries- Under this channel of important for genera ng electronic U liza on
disbursement, funds would be transferred directly Cer ficates (UCs)/accoun ng
to the bank/postal accounts of beneficiaries from purpose/informa on loop to beneficiaries, etc.
the Ministry/Department and there shall be no
intermediary accounts. The funds will be
maintained at the Central level.

36
An illustra ve example: NeFMS project under MGNREGS

Na onal Electronic Fund Management System (NeFMS) is a pilot project launched by the Central government on
01.04.2016. This has been implemented in 11 states, namely Assam, Bihar, Haryana, Karnataka, Kerala, Odisha,
Punjab, Rajasthan, Tripura, U arakhand and U ar Pradesh for direct and faster disbursal of wages (excluding
material component and administra ve component) under the Mahatma Gandhi Na onal Rural Employment
Guarantee Scheme (MGNREGS). The expenditure on wage component is debited to the Major Head of Account
2505 – Rural Employment while the expenditure on material cost and administra ve component are debitable to
the Head of Account 3601 - Grants-in-aid to State Govt. (Major Head). The fund flow process under N-eFMS takes
place as follows:

Ÿ Department of Rural Development sends Fund Transfer Orders (FTOs) for wage component to PFMS daily.

Ÿ PFMS sends the FTOs to respec ve Bank/ India Post Accounts.

Ÿ Banks/India Posts will send response files to PFMS.

Ÿ These response files will be subsequently shared with the Department.

Ÿ Payment for validated beneficiaries will be transferred directly into the accounts of the beneficiaries.

Ÿ Payment for failed transac ons will be re-ini ated.

37
 FUND FLOW VIA MINISTRY/DEPARTMENT

Illustra ve example-
DESIRED FUND FLOW PROCESS
NeFMS project (MGNREGS)

Under N-eFMS, the Department of Rural

STEP Maker appointed by Ministry/ Development ( DoRD) creates Fund

01 Department to create payment files

a er verifica on and place them on PFMS
Transfer Orders (FTOs) i.e. payment files
for wage component and sends
them to PFMS daily

PFMS validates the NREGA workers’ details

STEP Authoriser appointed by Ministry/ with the respec ve Banks/Postal Accounts,

02 Department to approve the payment shares the same with DoRD which is
approved and digitally signed by the
files and digitally sign them on PFMS
Authoriser. Valida on of a new beneficiary
bank account for a scheme is a one- me ac vity

STEP PFMS to validate and send payment

Sending of payment file by PFMS to

03 files to the sponsor bank of

Ministry/ Department
sponsor bank of DoRD

STEP Sponsor Bank to transfer payment Transfer of amount by sponsor bank

04 to beneficiaries' accounts of DoRD into NREGA workers' accounts

Sponsor bank to route all transac ons

STEP through NPCI. All Aadhaar based Sharing of payment status response
(success/failure back to PFMS server) file

05 transac ons to be routed through APBS

and all Non Aadhaar based transac ons
to be routed through NACH
by sponsor bank of Ministry/Department
with PFMS

Sponsor bank to share payment status response

STEP file with PFMS. PFMS to share the response files
with Ministry/Department i.Feedback to Payment for failed transac ons to be

06 beneficiaries through SMS alerts-credit/debit

informa on by beneficiary's bank ii. Scheme wise
informa on by PFMS/PD
re-ini ated by Ministry a er rec fica on

STEP Payment for failed transac ons

07 to be re-ini ated by Ministry/ Department

a er rec fica on and repeat Steps 1 to 6.

*The illustra ve example may not follow the desired fund flow process exactly
38
ii) Through State Treasury Account

Under this channel of disbursement, funds from the Central Government will be transferred to beneficiaries'
accounts through the State Treasury Account. This route is generally adopted in Centrally Sponsored Schemes
which are largely funded by the Central Government with a defined share of State Government. A er receipt of
Central share in the State Consolidated Fund and matching State share, funds are transferred to
Districts/Panchayats from the State Consolidated Fund and then to the beneficiaries. However, it may also be
possible that the State may use an electronic Fund Management System of its own for payments in which case the
funds will be transferred from the State Consolidated Fund directly into the beneficiaries' accounts.

Illustra ve Example: Indira Gandhi Na onal Old Age Pension Scheme in U ar Pradesh

The Indira Gandhi Na onal Old Age Pension Scheme (IGNOAPS) is a non-contributory old age pension scheme that
covers Indians who are 60 years and above and live below the poverty line. The pension scheme is part of the
Na onal Social Assistance Programme (NSAP) that was launched by the Ministry of Rural Development in August,
1995.

Presently, on the basis of Socio-Economic Caste Census (SECC) data, funds are allocated to the States / Uts.

Funds for IGNOAPS are released to the Consolidated Fund of the State Government of U.P. A er receiving the share
from the centre, the state withholds its share and transfers the fund to individual beneficiaries from the State
treasury. The detailed fund flow is explained henceforth.

The fund flow from the Ministry to the State treasury and from the State treasury to the end beneficiary is mapped
en rely to the centralized PFMS. The bank/postal account details of the end beneficiaries are sent to PFMS for
valida on of bank accounts.

The payment files are electronically generated by the Department of Rural Development of the State government
and placed on PFMS for payment. The payment file is then digitally authorised by the concerned finance officer and
nodal officer of the State department. Finally, this file is sent to the State Treasury, where the payment file is verified
and based on availability of funds under the appropriate head to which the old age pension corresponds, funds are
released directly into the account of the beneficiary through PFMS.

39
 FUND FLOW VIA STATE TREASURY

Illustra ve example-
DESIRED FUND FLOW PROCESS
IGNOAPS in U.P*

STEP Maker appointed by State Department of Rural Development,

U.P (U.P DoRD), electronically

01 Department to create payment files

a er verifica on and place on PFMS
generates payment files. The payment
files are sent to be placed on PFMS

PFMS sends e-files to banks for

STEP Authoriser appointed by State valida on. Verified files are sent to

02 Department to approve the payment

files and digitally sign them on PFMS
the concerned finance officer and
nodal officer of U.P, DoRD for digital
authorisa on

STEP PFMS to validate and send payment State Treasury of U.P receives payment

03 files to the sponsor bank of

State Department
files from the department via PFMS
and digitally signs the payment files

STEP On receiving payment files, sponsor

Sponsor Bank to transfer payment bank of State Department of U.P will

04 to beneficiaries' accounts ini ate payments to beneficiaries'

accounts

Sponsor bank to route all transac ons

STEP through NPCI. All Aadhaar based Sharing of payment status response file

05 transac ons to be routed through APBS

and all Non Aadhaar based transac ons
to be routed through NACH
by sponsor bank of State treasury of U.P
with PFMS

Sponsor bank to share payment status response

STEP file with PFMS. PFMS to share the response
Payment for failed transac ons to be
files with Ministry/Department. i. Feedback

06 to beneficiaries through SMS alerts-credit/

debit informa on by beneficiary's bank
ii. Scheme wise informa on by PFMS/PD
re-ini ated by State Treasury of U.P. a er
rec fica on

STEP Payment for failed transac ons to

07 be re-ini ated by Ministry/ Department

a er rec fica on and repeat Steps 1 to 6

*The illustra ve example may not follow the desired fund flow process exactly
40
iii) Fund Transfer through Implemen ng Agency

Under this channel of disbursement, funds will be transferred by Ministry/Department to an iden fied
implemen ng agency as nominated by Ministry/Department as per the budget allocated to such implemen ng
agencies. These implemen ng agencies will be responsible for further transfer of funds to banks/postal
accounts of the iden fied beneficiaries.

Example:- UGC as an implemen ng agency for various scholarship/fellowship schemes

UGC is an implemen ng agency for various government schemes rela ng to scholarship programs. The fund
flow mechanism is as under:

Ÿ UGC receives the amount of funds allocated for scholarships under the department's budget.

Ÿ UGC iden fies the beneficiaries/scholarship holders. The list of such iden fied beneficiaries is uploaded on
the web portal maintained by UGC.

Ÿ A er valida on of beneficiary list by PFMS, payment files are generated by the UGC's sponsor bank.

Ÿ These payment files are digitally signed by authoriser appointed by UGC and then sent to PFMS through the
UGC portal.

Ÿ The sponsor bank, on the receipt of payment files from PFMS, ini ates the process of fund transfer.

Ÿ Payment status response file of the fund transfer is shared by the sponsor bank with PFMS which in turn
shares the same with UGC.

Ÿ Payment for failed transac ons to be re-ini ated by UGC a er rec fica on.

41
 FUND FLOW VIA IMPLEMENTING AGENCY

Illustra ve example-
DESIRED FUND FLOW PROCESS
UGC Scholarship Schemes*

STEP Maker appointed by State UGC, the Implemen ng Agency

01 Department to create payment files

a er verifica on and place on PFMS
electronically generates payment files
which are then placed on PFMS

STEP Authoriser appointed by State Authorising officer of UGC to approve

02 Department to approve the payment

files and digitally sign them on PFMS
the payment files and digitally sign them
on PFMS

STEP PFMS sends validated payment

PFMS to send validated payment

03 files to the sponsor bank of

Implemen ng Agency
files to sponsor bank of UGC

STEP Sponsor Bank of Implemen ng Sponsor Bank transfers scholarship

04
Agency to transfer payment to amounts to scholarship holders' accounts
beneficiaries' accounts

Sponsor bank to route all transac ons

STEP through NPCI. All Aadhaar based Sponsor Bank shares payment status

05 transac ons to be routed through APBS

and all Non Aadhaar based transac ons
to be routed through NACH
response files with PFMS.
PFMS shares the same with UGC

Sponsor bank to share payment status response

STEP file with PFMS. PFMS to share the response Payment for failed transac ons to
file with Ministry/Department. i. Feedback

06 to beneficiaries through SMS alerts-credit/

debit informa on by beneficiary's bank
ii. Scheme wise informa on by PFMS/PD
be re-ini ated by UGC a er
rec fica on

STEP Payment for failed transac ons to

07 be re-ini ated by Ministry/ Department

a er rec fica on and repeat Steps 1 to 6

*The illustra ve example may not follow the desired fund flow process exactly
42
Transac on Charges to Financial Agencies for DBT Transac ons

The banking and postal networks in the country have a pivotal role to play in the successful implementa on of
schemes on the DBT pla orm. The banks and post offices not only provide financial facili es in terms of bank/postal
accounts to the beneficiaries of schemes, but also bear the responsibility of ensuring last mile connec vity and
accessibility to benefits provided in the bank accounts of beneficiaries. They are thus required to devote addi onal
resources in terms of financial, physical and human resources for this purpose.

To ensure an adequate incen ve mechanism for the financial intermediaries, the Ministry of Finance has issued a
Government Order (No. 32(07) /PF-II /2011- Vol. II) dated 26.02.2016 s pula ng transac on charges/cash out
incen ves for DBT transac ons carried out by banks and post offices. As per the Government Order, this
commission is paid in two parts, as described below:

i) Transac on charges

A transac on cost of Rs. 0.50/- would be payable for every transac on that happens between the sponsor banks,
des na on en es and NPCI in accordance with the extant NPCI circular.

ii) Cash out incen ves

For MGNREGA, Maternity Benefits (ICDS) and Pension Schemes, a fixed component of Rs. 5/- per transac on and an
available component of Rs. 0.50/- per Rs. 100 (transac on amount rounded up to the next hundred) subject to a
maximum of Rs. 5/- would be payable. This incen ve is provided to promote last mile delivery of financial services.

These transac on charges are however subject to changes in future as per requirements.

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