Tamil Nadu plans to apply for payment bank licence, says PTR

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The Tamil Nadu government is planning to seek a payment bank license to help monitor the disbursal of funds from the government treasury efficiently until it reaches the right beneficiary of various welfare schemes. This is part of the several measures being undertaken by the state finance department so that funds meant for social welfare schemes do not lay idle, aren’t delayed and so that the money earmarked for the same isn’t shifted and parked elsewhere.

“The payment banking license system is a minor step, not a complicated step,” said state finance minister P T R Palanivel Thiaga Rajan on Monday while interacting with reporters. “We have already integrated with three or four banks. It will increase data transparency and cut middlemen, and of course, it will expand the reach because many people don’t have accounts in just these four banks.”

He added that they state could also use interfaces like UPI, Google Pay to disburse money to the beneficiaries. He said that the process would take a few months, roughly 18 months after the state submits necessary papers. “We have to build the infrastructure first and meet the standards of the Reserve Bank of India.”

The finance minister said that a special task force constituted by Tamil Nadu’s ruling DMK tracked funds to the tune of 1,946.31 crores unutilised by various district administrations and departments, which can be immediately remitted back to the government treasury.

This comes after the minister, in his maiden budget presented in August, had announced the formation of such a task group under the finance department to reconcile the accounts and identify funds that have lapsed and can still be utilised. He had then raised the issue of government funds being shifted to accounts outside the view of the treasury system which they have now tracked. The details of bank accounts where government money was parked as of March 31 this year were collected from multiple sources like banks, district collectors, government departments and other quasi-governmental entities. “The 2,000 crore that can be remitted back to the treasury is just a trailer…I don’t want to commit any amount but I am sure several thousand crore rupees will be remitted back to the government account in the next few months as the task force continues to analyse,” he said, addressing a press conference in the state secretariat. The task force’s tenure has been extended till March 31, 2022, to continue with auditing.

To ensure that these funds do not remain idle in the future, Rajan said that the state government was putting in place a state-level public financial management system (PFMS) in association with agency banks to track the flow of funds allocated under government schemes from the state exchequer till they reach beneficiaries including pensioners, government servants receiving salaries, recipients of scholarships and final payments for works and supply of goods and services.

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