Direct Cash Transfer

Direct Cash Transfer

The current government has enrolled a process on distributing money through a mean of direct transfer of cash to people in need throughout the country. In this article, we will have a look at the various pros and cons including the flip side of this process.

  1. Who, where, how, when and whom- The advantage of this process should reach the poor and uneducated masses, mostly to the people below and just above the poverty line in India, via direct transfer through wire, deposit of cash, or special bank transactions to alleviate the poverty of some part of the masses, as well as make an uniform attempt to level the earnings at some stage for a wider mass.
  1. First things first- The first thing is to define the BPL. Let us say that 75% of the population is poor. Then, how the poorness defined vis-à-vis the uneducated mass is the question. If we are able to draw a 2-2 matrix,

 

100% of the population

Below PL

Above PL

Educated Mass

25%

15%

Uneducated Mass

50%

10%

 

The base for cash transfer for each of the segments is different for each of these.

  1. Modus Operandi- The question arises now how can that are done? Would opening a bank account with a special transaction type would be a solution to this? Or a direct wire transfer to each of these accounts can be done? Let us have a look beneath.

Most of the people have reach to post offices and national banks supported by government. The question is who will be the better stake holder here. Will it be the deposits run by post-offices or SBI per say? How is the affinity to a government-run bank in the sub-division among the masses? How is the proximity of the banks among other geo locations? All this has to be answered in tandem. We cannot create more than necessary stake holders that may have a conflict later. Where the banks have not penetrated or are not thinking to penetrate, the post-office actually comes to the vision. But if an existing geography requires a bank, how will the cash be transferred then is the schema that we need to know. How will the people react to the change and the introduction of a new stakeholder is something that needs to be analysed.

  1. Enter UIDAI- How will the “Aadhaar” scheme help? If we say that the UIDAI Card actually helps in identifying bio-metrics that will help in disbursing small loans and greater amounts of money, how will this work? How will UIDAI conjugate to fill the identity of the person who will be responsible to draw the money for their purpose?
  1. There are various means of transfer of funds. Some of the methods are:

Method 1: Independent cash transfer to bank accounts with messages delivered to the primary bank account holder via electronic means, bank agents, or in specific period of time. By electronic means, the ways will be via SMS, MMS, special codes, interactive messages; whereas bank agents will be responsible to carry out a cash-and-identity instrument that would be responsible for cash dispense. The periodical time lines would be a week, a month, or a quarter, even a year.

Method 2: Electronic transfer or wire transfer of funds to the designated accounts via mobile top-ups eased as mobile-wallets or electronic wallets.

Method 3: UID Cards in conjugation with bank account will work towards the correct means of transfer. UID will provide the necessary affirmation of identity, at the point of cash disbursal. UID checks through finger prints and retina scan while the primary account-holder benefits via withdrawal through the banks.

1.      Even then some of the questions are still to be discussed-

       1.      Type or method of transfer to be initiated for zones without any presence of national banks

       2.      Involvement and extent of involvement of other financial institutions

       3.      Involvement of UID towards this scheme

       4.      Secrecy of transfer to the people

       5.      Distribution methods and audits

       6.      Mass education for agents and people benefiting transfer

       7.      Amount to be dispersed in phases

       8.      Type of disbursement like loan, wage, smaller loan, for below Poverty Line

       9.      Defining the standards of below poverty line

      10.  Other associated factors for defining below poverty line in aggregation like, number of children, number of earning members, number of impaired people in the family and many other factors.

 

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