RBI asks banks to be ready with Adhar-enabled electronic cash transfer facility

The Reserve Bank of India (RBI) has advised those banks that have been tasked with implementation of social security schemes to open `Adhar Enabled bank Accounts' (AEBA) for routing wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), and the proposed cash transfers in respect of subsidies on kerosene, LPG and fertilisers.

The RBI had earlier issued operational guidelines on implementation of 'electronic benefit transfer' and its convergence with the government's 'financial inclusion plan'.

RBI said the facility should be extended to all beneficiaries of social security schemes, including those residing in villages with population below 2,000,  in view of the timelines attached to the implementation of EBT.

EBT facility for servicing low-value accounts and extending banking infrastructure to underserved low income areas has been implemented in select districts of Andhra Pradesh, Haryana, Karnataka, Orissa, Chhattisgarh, Himachal Pradesh, Uttarakhand, Bihar, Punjab, on pilot basis on a `one district-one bank' model.

However, beneficiaries have expressed difficulties in scaling up the model since the `one district – one bank' model has not been able to achieve the objective of financial inclusion.

Allocation of villages amongst banks under the FIP (roadmap for providing banking services to villages with population above 2,000), has been generally on the basis of the service area approach. This has led to a situation wherein the designated bank for EBT and FIP in the same village differed.