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Aadhaar linked Direct Benefit Transfer Schemes continue to be a pain for those seeking Govt subsidies; even as scamster’s benefit from the same


The Modi Government, with the introduction of Aadhar, hoped to provide a considerable portion of government issued subsidies to the beneficiaries since a majority of these subsidies went untraceable and not to the people it was due because of large scale corruption.

Hence, Aadhar was touted as the solution to this major flaw, clean the system of any irregularities, and to make sure to benefit the actual entity.

The government came up with the ideal solution of transferring the money directly into the beneficiary bank account under the Direct Benefits Transfer (DBT) scheme. 

Thus the government combined the bank account and the DBT scheme and linked both with Aadhar of the beneficiary.

However, in reality, the Aadhar Cards have been big trouble and continue to be so when it comes to Direct Benefit Transfer Schemes. 

There had been a continuous debate on interlinking of Aadhar with bank accounts, and despite several and many clarifications from the Reserve Bank of India, the Unique Identification Authority of India, and Supreme Court order to make the interlinking of Aadhar and Bank accounts voluntary, for the beneficiaries to avail the benefit under the Direct Benefit Transfer (DBT) continues to be a challenging prospect.

Direct benefit not to beneficiaries but scammers

There have been several reports citing how people availing of the Public Distribution System and MGNREGS are finding it increasingly difficult to avail the same as Aadhar is posing a dilemma.

It is also posing a significant problem for the disbursement of money for scholarships, the PM Kisan scheme, LPG subsidies, and many more. 

To substantiate the problems that the people are facing in availing these benefits because of Aadhar, a campaign called Rethink Aadhar has published a report highlighting the ease with which scamsters basis Aadhar enabled scams have thrived in the form of DBT’s.

In the report, it mentions several points that are major concerns, 

  • Beneficiaries are unaware of how and when their personal details, including their Aadhar numbers, are used to divert payments under the Aadhar – based – DBT system.
  • Many of these beneficiaries have claimed that they have not received or receiving the amounts transferred under the DMT schemes in their respective bank accounts
  • The government departments create multiple bank accounts to transfer these subsidies, without any intimation to or knowledge of the person in whose name these bank accounts have been created.

According to the campaign, the problems have doubled because of a marked increase in the number of steps; the pre – Aadhar system of DBT was earlier conducted through NEFT transactions under which the RBI was the sole agency between banks and beneficiaries. 

However, under the new system, it functions through an Aadhar Payment Bridge, which is presently operated by a private player – the National Payments Corporation of India. 

The problem is that instead of making the entire process simple, which was the sole goal of this technological innovation, it has instead made it less transparent and beyond the reach of ordinary people.

To add to this, several Aadhar linkages – based technical errors have been reported as well. 

What is the problem?

Under the new Bridge system, the NPCI links the Aadhar number to the bank account number of a beneficiary; hence the DBT takes place in the bank account number that is linked, but the linkage of the bank account is the “last linked” bank account, and this is where the problem arises, there is no way to know whose account it is?

beneficiary consent is needed to link the bank account, but in practicality, this practice is totally absent, which means that the beneficiaries have no clue what accounts have been created in their names and linked to their Aadhar numbers.

Another major problem is that the list of the bank accounts that are associated with the Aadhar numbers is only available with the NPCI; hence a particular beneficiary has no way of knowing which bank accounts have been linked and if it is even their account, to which the money may be being transferred under the DBT scheme.

Moreover, since the central authorities have taken over these payments’ clearing, beneficiaries who may feel that there may be something amiss have no recourse to appeal to the local governments at the district level, block or gram panchayat levels for any help or seeking of information. 

This is a significant problem since the beneficiaries under the DBT schemes need to get access to the money that is meant for them as the current economic condition due to Covid -19 pandemic has seriously affected their incomes and compounded their money problems. 

Incidents of these scams

Recently, an investigation was done by The Indian Express, and it reported the massive corruption in play when it came to disbursement of pre – Matric Scholarship money for the poor minority students in Jharkhand.

The misuse of the funds and the scam was also replicated in other states of the country; the same was reported in Assam, Punjab, and Bihar, where either the students received only a small amount of the funds or were able to access small amounts thanks to the nexus between brokers, bank officials, bank correspondents, school staff and state government employees.

Along with the above instances, the report also highlights how LPG subsidies have ‘vanished’ during the lockdown and how publicly available Aadhar numbers were misused to siphon away money in a wide ranging PM Kisan scam.

After the Indian Express investigation, the Ministry of Minority Affairs listed down five preventive measures to be implemented on an immediate basis for ‘securing” the process for the academic year 2020 – 21. 

However, these are just some examples of how the money intended for the beneficiaries has been scammed away at different levels by authorized people. 

In another investigation done by The Quint, scamsters had successfully registered for the Centre’s PM – Kisan scheme, on its portal using publicly available Aadhar numbers, incidentally Riteish Deshmukh, Lord Hanuman, and ISI spy Mehboob Akhtar – had been listed them as “small and marginal farmers” eligible for DBT and had received amounts of Rs 6000, Rs 4000 and Rs 2000 respectively. 

In conclusion, while the Aadhar listing with bank accounts of beneficiaries was done to do away with corruption and intended for the benefit of the poor, it has become a steady source of income for these scamsters. 

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