Kerala government announces it will end social security and welfare pension distribution through cooperative banks, adopting a mandatory Direct Benefit Transfer system linked to Aadhaar, after addressing issues of delays and errors in the existing model.
Kerala has decided to end the use of cooperative banks to deliver social security and welfare pensions, moving most beneficiaries on to Direct Benefit Transfer into Aadhaar-linked bank accounts, according to an order issued by Additional Chief Secretary K R Jyothilal. The change leaves only bedridden people and others who cannot reasonably be excluded from home delivery in the existing doorstep system.
The government said it reviewed the arrangement after repeated problems with delayed remittance of unspent pension money, failures to update records on time and reconciliation errors. It also cited cases in which the same pension was paid more than once because Aadhaar-based payment rules had not been fully implemented. Officials said the current model also required incentive payments to cooperative banks and risked Kerala losing central assistance if it did not comply more fully with Direct Benefit Transfer norms.
The move marks a significant shift from a system that had become routine in the state. Onmanorama reported in February that Kerala had set aside ₹1,050 crore for pension distribution that month, with about 62 lakh beneficiaries due to receive ₹2,000 each. At that time, more than 26 lakh people were already getting money directly in their accounts while the rest were still receiving cash at home through cooperative banks.
The new decision could also reshape how Kerala handles later pension instalments. In July, The Hindu’s sister publication ETBFSI reported that the state had sanctioned ₹941.73 crore for more than 51 lakh recipients, with a mix of bank transfers and doorstep cash delivery through primary cooperative societies. The state’s broader DBT system has been in place since 2015, according to the Kerala government’s Information Kerala Mission, but the latest order effectively makes that route mandatory for nearly all pensioners.
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