Parliamentary panel flags fund parking and DBT lapses in education scheme

PAC report points to fund parking outside government accounts and delays in direct transfers under scholarship scheme, urging stronger oversight and DBT compliance

A parliamentary panel on Friday flagged significant financial and procedural lapses in the implementation of the Centre’s National Means-cum-Merit Scholarship Scheme (NMMSS), noting that large sums of public funds were parked outside government accounts in violation of rules.

 

In its latest report tabled in Parliament, the Public Accounts Committee (PAC) said the Ministry of Education failed to adhere to General Financial Rules and did not fully utilise the Public Financial Management System (PFMS) for direct benefit transfers. This resulted in funds being routed through a State Bank of India (SBI) account rather than being transferred directly to beneficiaries.

 

Audit findings cited by the panel showed that undisbursed balances lying with SBI ranged between Rs 12.96 crore and Rs 429.65 crore during 2016–17 to 2022–23. The ministry also treated funds released to the bank as “utilised” without verifying whether the amounts had actually been credited to students’ accounts, in contravention of prescribed rules.

 

The committee noted that this arrangement enabled the accumulation of substantial float funds with the bank, while the money was held in a current account that did not earn any interest. The PAC also pointed out that the operational costs of implementing the scheme were effectively being offset through these float balances, without corresponding amendments to the memorandum of understanding with SBI, indicating lack of due diligence.

 

The report further highlighted delays in refunding undisbursed funds. While Rs 34.97 crore was returned by the bank during 2014–15 to 2017–18, no refunds were made for the subsequent four years until the issue was flagged by audit.

 

Following this, the ministry recovered Rs 100.06 crore in December 2022 and an additional Rs 56.52 crore in 2023–24.

 

The PAC also flagged weaknesses in internal oversight, noting that no internal audit of the scheme had been conducted, which could have detected the accumulation of idle funds earlier.

 

On the implementation side, the committee observed that technical glitches in the National Scholarship Portal (NSP) delayed the full rollout of the scheme for several years after it was onboarded in 2015–16, with the system becoming fully operational only from 2018–19. Issues relating to portal functionality, verification processes, and integration with PFMS affected timely disbursal of scholarships.

 

The panel also pointed to gaps in scheme coverage. While the scheme targets about four lakh beneficiaries annually, including renewals, the actual number of beneficiaries has been around 2.5 lakh per year.

 

The PAC also recommended strengthening internal audit mechanisms, ensuring strict adherence to DBT processes, and resolving persistent issues with the scholarship portal. It also called for an increase in the number of beneficiaries and a review of the scholarship amount, currently Rs 12,000 per annum, noting that it may be insufficient to meet current education costs.

 

The Ministry has informed the committee that corrective steps have been initiated, including shifting payments to a system where funds are transferred directly from the government’s Pay and Accounts Office to beneficiaries’ bank accounts under the PFMS-based direct benefit transfer framework, instead of routing them through an intermediary bank account.

 

It also said undisbursed balances are now being recovered on a yearly basis from 2022–23 onwards, and a revised agreement with SBI is being worked on.