The direct benefit transfer (DBT) system has received its share of flak in the years since its inception. Particularly, the infrastructure has been criticised for its opacity of functioning at the back end. Being highly complex and data-driven, the DBT ecosystem requires coordination across various organisations involved (such as the National Payments Corporation of India (NPCI), the Reserve Bank of India (RBI), various coordinating government departments, and banks). How these organisations interlock is not immediately apparent to the lay observer, and this accounts for the lack of transparency that seems to shroud the DBT system. The issue is particularly concerning when transactions fail, preventing a successful DBT payment into citizens’ bank accounts. If DBT recipients are unable to identify the reasons behind the failure of welfare payments that they are entitled to, then they will be unable to play an active role in issue resolution. Without easily accessible information about transaction failures, the DBT system risks creating a rift between itself and the population it seeks to serve.
To be fair, the NPCI has indeed taken considerable effort to minimise teething issues in the DBT system. Much progress has been made towards eliminating several types of payment failures. For context, the processing of a DBT payment file requires that a payment file be pushed between the institutions concerned—collecting initial approvals from the implementing department/ministry, validation responses from the PFMS or Public Financial Management System, and payment status responses from banks. In the event of a DBT return (or failure), participating banks would use their own response codes, making it difficult for the implementing agencies to effectively pursue their resolution. Many of these transaction failures have been standardised, with the objective of first properly identifying and then eliminating several types of failure. This is one example of how the DBT system has evolved greater transparency and better coordination.
Yet, there remains ground to be covered. Some of the DBT returns that banks have been instructed to eliminate still persist. Further, our fieldwork indicates that beneficiaries often experience payment failures due to errors in their Aadhaar details, and pending KYC or know your customer forms. The resolution of these issues may not be difficult for the citizen to undertake but are not likely to be common knowledge for the average DBT recipient. Considering these problems, we suggest that the NPCI take a more proactive approach towards incorporating transparency in the DBT system.2
- Improving coordination between organisations
The successful backend processing of DBT payments requires a significant amount of coordination between the NPCI, the RBI, beneficiaries’ banks and the respective scheme’s implementing government department. We posit that an increased flow of information across these entities through streamlined communication would allow them to work in tandem to improve the system. Having a common grievance redress cell for all DBT schemes would facilitate integrated action with inputs from all agencies involved.
- Facilitating transparency by improving channels of communication
In addition to improving coordination between entities involved in payment processing, another approach to improving transparency is by simply making information about the workings of the DBT system more accessible. For instance, the NPCI may regularly publish reports pertaining to DBT transaction failures. Such reports may provide an overview of how DBT transaction failures may vary across location types (urban/rural), scheme, along with predominant root causes for such failures. A similar approach may be taken towards grievances pertaining to the DBT system. While DBT grievances are typically collected by banks, they may have implications for other stakeholders in the DBT ecosystem as well. Public dissemination of grievance and failure data can facilitate deeper research into which components of payment processing require revisions. Such information, if leveraged effectively, can contribute to further improvement of the DBT system and error reduction.
Another vital component of the NPCI’s communications is the information it passes along to DBT recipients. From our interactions with DBT recipients through field surveys, we know of a persistent lack of awareness regarding the reasons that benefits are not credited to their accounts. Overall, beneficiaries do not have a clear picture regarding the back end of DBT payments. As a result, they cannot take necessary actions to correct issues hindering their payments.
Only a few schemes (particularly, the Pradhan Mantri Kisan Samman Nidhi) facilitate greater information sharing with citizens through online dashboards containing details of payment status, reasons for credit failure, etc. We recommend that all schemes enable live tracking of application and payment status for citizens. Ideally, the specific reason for pendency/rejection of a payment should be added to the beneficiary’s online record and proactively communicated to the beneficiary. Beneficiary records should also include the next step the beneficiary can follow to resolve issues. These measures would go a long way in creating an accessible, transparent environment for citizens to access their entitlements.
Going forward, the DBT system is likely to expand in size and structure. Already, many states are creating entire digital ecosystems to facilitate the delivery of all manner of government-to-citizen (G2C) services, especially social protection. The proliferation of such intricate digital systems must be accompanied by an increased commitment to raising the level of transparency and accountability that citizens can expect. Not doing so would imply that delivery systems fail citizens when issues persist.
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