What is Direct Benefit Transfer (DBT)?

Direct Benefit Transfer streamlines welfare payments, ensuring efficient and transparent distribution of funds to beneficiaries.
3 min

The underprivileged population in India receives subsidies through different schemes from the central government. However, these subsidies can sometimes fail to reach eligible individuals due to malpractices and lack of transparency. As a result, the government introduced the Direct Benefit Transfer scheme in January 2013 with the aim to reduce the loss of subsidies.

Also read: Small savings scheme

How does direct benefit transfer work?

The process begins with the government complying with a list of eligible people for this scheme through the Central Plan Scheme Monitoring System (CPSMS). Afterwards, payment instructions are sent to the Public Financial Management System (PFMS) to initiate the payment instructions, which are then routed to banks after the validation of beneficiaries.

PFMS, which is integrated with 500+ banks, serves as a robust platform for verifying the beneficiaries’ bank accounts and Aadhar seeding their bank accounts with NPCI. This verification process has drastically reduced payment failures and delays.

Banks play a key role in the process as a last-mile delivery channel. Since all account-based transactions are routed through core banking channels, ensuring process efficiency has accelerated and streamlined the process of direct benefit transfers.

Also read: NSC scheme

Purpose and objectives of direct benefit transfers

The DBT scheme is a well-planned and well-integrated initiative introduced to streamline the transfer of subsidies. Through this scheme, the government aimed to improve the delivery and design of existing procedures in welfare schemes.

The primary goal of this scheme is to ensure a seamless flow of funds and information to the beneficiaries and to reduce fraud in the delivery system. In addition, the scheme caters to the beneficiary with precision without the need for mediators, thus reducing delay. It also reduces the number of layers involved in the process of benefit provision.

Also read: Monthly income scheme

Categories of schemes covered under DBT

The categories of schemes covered are as follows:

1. Cash transfer

Under the cash transfer category, the government immediately transfers cash benefits to the beneficiary. Examples of this category include NSAP, PAHAL and MGNREGA, among others. The government can transfer the money to the beneficiaries in the following ways:

  • Beneficiaries directly receive the amount.
  • They receive the amount through the State Treasury Account.
  • The implementing agency appointed by the government makes cash transfers.
  • The amount is transferred to them directly through the state or central government.

2. In-kind transfer

Under this category, the government offers in-kind benefits to beneficiaries directly or through appointed implementing agencies. In this, the government bears the expense of procuring a benefit or subsidy. For instance, the government will purchase certain products, such as food grains, and offer them for public distribution. The beneficiaries receive these products or services for free or at a reduced cost.

3. Other transfer types

This includes all the other types of benefits besides cash and in-kind transfers to non-government members, such as NGO workers, community workers, ASHA workers, teachers and others, that contribute to the implementation of government policies. They are not beneficiaries but are offered wages, training, food, incentives, and other benefits to serve the beneficiaries.

Also read: Dhanlaxmi Yojana

Key government schemes under the direct benefit transfer

  • Khelo India
  • Atal Pension Yojana
  • Green India Mission National Afforestation Program
  • Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)
  • Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM)
  • Deendayal Upadhyay Grameen Kaushalya Yojana
  • Pradhan Mantri Bhartiya Jan Aushadhi Pariyojana (PMBJP)
  • Pradhan Mantri Fasal Bima Yojana
  • Pradhan Mantri Krishi Sinchai Yojana
  • Pradhan Mantri Matsya Sampada Yojana
  • Pradhan Mantri Vaya Vandana Yojana
  • National Livestock Mission
  • National Food Security Mission
  • National Ayush Mission
  • National Mission for Sustained Agriculture (NMSA)
  • Swachh Bharat Mission Gramin

Benefits of direct benefit transfer

Some of the key benefits of direct benefit transfers include:

  • The scheme accelerates the flow of information and funds securely while reducing the chances of fraud.
  • It ensures precise targeting of beneficiaries.
  • It omits the need for intermediaries, such as government officers, to transfer the subsidy amount into the beneficiary’s account.
  • It offers transparency and eliminates malpractices in the subsidy distribution process, thus expediting the safe distribution of assets.
  • Beneficiaries can only link a single bank account by seeding the deposits to their Aadhaar card details to prevent duplication of subsidies.
  • This approach has enabled the unique linking of rural and urban households for government subsidies and easy money transfers.


Direct benefit transfers have emerged as a crucial means for the Indian government to reform its delivery system by re-engineering the existing process of welfare schemes into a process that facilitates the faster and simpler flow of funds and information. They help ensure accurate targeting of the beneficiaries and reduction of fraud. In addition, it has emerged as a high-priority area for the government to deliver development schemes, having delivered over 450 schemes to more than 900 million people through this mode.

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Frequently asked questions

What does DBT mean in banking?

In the context of banking, Direct Benefit Transfer (DBT) can be referred to as the process of transferring a subsidy amount and making other transfers into the account of the beneficiary directly, as opposed to providing them to government offices.

How do I enable DBT on my bank account?

To enable DBT in your bank account, visit the branch where you have opened an account and fill out the bank’s consent form, requesting them to link your Aadhaar with your account. The bank will then seed your account with an NPCI mapper to enable DBT.

What is the DBT mode of payment?

The DBT mode of payment is where subsidies and other benefits are directly transferred to the bank accounts of the beneficiaries under various Indian welfare schemes. DBT includes 317 government schemes. To avail DBT seamlessly, beneficiaries must link their bank accounts to their Aadhaar.

Is Aadhaar mandatory for DBT?

Aadhaar is not mandatory in DBT schemes.

Who is eligible for direct benefit transfer?

The eligibility criteria often vary depending on the DBT scheme. For instance, under PMUY, the eligibility is based on socio-economic factors such as income and household status. Under MGNREGS, the eligibility is based on the age, gender, and rural location.

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