FinMin nod for direct cash transfer through post-offices

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Rural Development, Minister Jairam Ramesh
Rural Development, Minister Jairam Ramesh

Workers under rural jobs schemes across India can now reap the gains from the Direct Benefits Transfer (DBT) with their existing savings accounts in Post Offices.

The Finance Ministry has issued a directive to allow cash subsidies under various Government schemes to be deposited in the beneficiaries’ PO accounts, that had been opened for transferring wages earned under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

This comes in the wake of a letter from Rural Development Minister Jairam Ramesh to Finance Minister P. Chidambaram, which said that a circular issued in 2008 states that “no deposit other than MGNREGA wage can be made in accounts (PO) opened for MGNREGA wage-earners.”

Ramesh added, “This defeats the very purpose of the Direct Benefits Transfer initiative launched by our Government.”


MGNREGA workers are allowed to open no-frills accounts, either in banks or post-offices. However, the accounts opened in post-offices could not be used for depositing any other cash subsidies or benefits.

With this new initiative, all cash subsidies under welfare schemes, including pensions and scholarships, can also be deposited in these accounts. Moreover, this would help avoid some confusion and inconvenience as, under DBT, deposits can be made only into one Aadhar-linked account.

Almost 36 lakh MGNREGA Post Office accounts exist currently, accounting for 43 per cent of the MGNREGA wage-earners.

Both the Government and the beneficiaries will be able to get the advantage of the world’s largest postal network of more than 1.5 lakh post-offices.

This change comes ahead of the rollout of the next phase of Direct Cash Transfer in February. In the first phase, launched on January 1, 2013, 20 districts were covered. The scheme will extend to 11 more districts in February.

(This article was published on January 18, 2013)
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