Tuesday, September 30, 2014

LIC will initially foot the bill for Rupay Debit Card Jan Dhan cover

The Government will, in due course, part-finance Life Insurance Corporation’s efforts in providing life cover of ₹30,000 to each Jan Dhan account-holder, Financial Services Secretary GS Sandhu said.

LIC will initially dip into its own social security-related fund to offer the life cover, and the Government will also pump money into LIC for this purpose, Sandhu told BusinessLine on the sidelines of an Assocham event here on Tuesday.

For the first year, there will not be any fund infusion from the Government and LIC would have to rely on its own internal resources to offer this facility, he said.

Gaining traction

The Pradhan Mantri Jan Dhan Yojana, which was launched on August 28, has received tremendous response with as many as 5.1 crore accounts opened so far.

The most comforting aspect is that banks have succeeded in ramping up their RuPay card rollout in recent days, Sandhu said.

As many as 1.6 crore RuPay debit cards have been issued so far.

Till September 24, only 50 lakh RuPay debit cards were issued under the scheme, raising concerns over the decision by banks to place orders only with two vendors.

But now banks have really started ramping up, Sandhu said, adding that the targets for PMJDY are likely to be met much before January 26 next year.

RBI will cut interest rate at the right time: Financial Services Secretary

Secretary Financial Services G. S. Sandhu announced for meeting with IBA (Indian Bankers Association) today on issues of salary revision of bankers to break dead locks as earliest as possible at an ASSOCHAM event held in New Delhi today.

Reserve Bank of India (RBI) is negotiating with the banks employees as there is a gap between the demand and offer and we will try to resolve the deadlocks very soon”. We are also going to call IBA to break this dead block as earliest as possible, said Mr. Sandhu at an ASSOCHAM event on “ASSOCHAM 10th Annual Banking Summit cum Social Banking Excellence Awards 2014” here today.

Replying on the RBI monetary policy, Mr. Sandhu said, “"RBI fully understands the issue, it fully understands needs and expectation of markets, so they will take a view (on cutting policy rates) when the time is right.”

While addressing the conference, Mr. Sandhu said, one of the important thing which was recently announced was the bank-recapitalization to meet the future challenges for growing economy and high trajectory. The ministry is preparing a blueprint on this and raising capital from the market and from other potential resources”.

He further said, the number of accounts opened under the Pradhan Mantri Jan Dhan Yojana has touched nearly around 5.1 crore account and 1.6 crore RuPay debit cards have been issued so far, said Mr. Sandhu at an ASSOCHAM event
In order to provide the much needed thrust a flagship programme called the “Pradhan Mantri Jan-Dhan Yojana” was announced by Prime Minister. He said, National Mission on financial inclusion encompassing an integrated approach to bring about comprehensive financial inclusion of all the households in the country. The plan envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility, said Secretary, Financial Services.

In addition, the beneficiaries would get RuPay Debit card having inbuilt accident insurance covers of Rs. 1 Lakh. The plan also envisages channeling all government benefits to the beneficiaries account and pushing the Direct Benefits Transfer (DBT) scheme of the union government, added Mr. Sandhu.

The technological issues like poor connectivity, on-line transactions will be addressed. Mobile transactions through telecom operators and their established centres as Cash Out Points are also planned to be used for financial inclusion under the scheme, points out the Secretary of Financial Services.        

Mr. R K Gupta, Executive Director of Bank of Maharashtra said, “Financial inclusion is nothing but providing banking & financial services to everyone in fair, transparent & equitable manner and at an affordable cost”.

Mr. Gupta further said, bank have perhaps the largest stake in the success of financial inclusion. However to realize this opportunity, they will need to create an entirely new portfolio of products and services delivered through radically different distribution structures which are aligned to the needs and lifestyles of the financially excluded consumer.

While addressing the conference, Mr. Sunil Kanoria, President-elect ASSOCHAM said that we need to think out of box and experiment with the new models of banking where banking penetration will not depend on bricks-and-mortar offices, but no technology. Mobile banking is something which needs to be considered seriously. Mobile technology has changed our lives and the way we communicate and do business. It has the potential to redefine banking too. There is already a national drive going on in the country to create an electronic infrastructure in the form of Unique Identification Authority of India (UIDAI) or the Aadhaar platform. 

Other who also spoke during the conference were Mr. M. Narendra Chairperson, ASSOCHAM National Council for Banking & Finance and Former CMD, Indian Overseas Bank, Mr. Abizer Diwanji, National Head of Financial Services E&Y, Mr. Nikhil Sahni, Senior President, Government Relationship Management, YES Bank, Mr. R. K. Gupta Executive Director Bank of Maharashtra and Mr. D. S. Rawat Secretary General ASSOCHAM..

Wednesday, September 24, 2014

PMJDY FAQ: Pradhan Mantri Jan Dhan Yojna Facilities, Mobile Banking, Withdrawal Limit & More

Why Jan Dhan Yojana was launched?
With a population of over 125 crore, 40% of families do not have access to banking and other financial services and such households have to rely on untrusted credit lenders who charge heavy interest from them. So the basic objective was to provide account to every family along with banking services.

What target government has set to make this scheme a success?
By 26 January 2015, government has set a target of opening one basic account for every 75 million (7.5 crore) households.

How will this target be achieved?
In order for easy access to the banking services, bank outlets would be open within 5 kilometer distance of every village. In fact, on the day of the launch over 77, 892 camps were organized. Also to speed-up the process, government has asked banks to organize special camps on every Saturday between 8am-8pm.

More recently, government has instructed to open bank accounts for workers under Mahatma Gandhi National Rural Employment Guarantee. These workers are currently paid through accounts held in either post-offices or co-operatives and very few workers have their bank account. This way, over 3.5 crores will be immediately created for non-account holders.

How many accounts have been opened till now?
Till date number of accounts have been opened by the banks (in lakhs) as follows:
SBI – 30
PNB – 20.24
Canara Bank – 16.21
Central Bank – 15.98
Bank of Baroda – 14.22

What banking facilities will a account holder get?
Through this Yojana, account holder will get universal access to basic banking services such as:
1) Withdraw cash
2) Deposit money
3) Transfer of funds
4) Check balance enquiry
5) Get mini-statement
6) Mobile banking facility
7) Become financially literate through literacy programmes drive. Learning material would be distributed in most of the Indian languages for everyone.

Where can be above mentioned banking facilities availed?
Account holder can use these facilities at any of bank branches where the account was opened. However it is required by the banks to scan and upload the signature/thumb impression along with the photograph through the core banking system (CBS). Individuals can also make use of RuPay card at ATMs and other online purchases.

How was the name, logo and tagline for the Yojana decided?
Government had run competition through their platform “MyGov” requesting participation for suggesting name, logo and tagline for this scheme. The competition was actively participated and over 6000 entries were received. And the winner for the logo was a female whereas the winner for proposing the name “Jan Dhan” were three individuals and the prize money was distributed amongst each. Logo winner was awarded Rs. 25,000 and Rs. 10,000 was given to each member who proposed the name. Prize money was given by honourable prime minister of India Shri Narendra Modi. However the tagline was not suggested by any participating member.

Is mobile banking facility available?
Yes, account holder can use their basic smartphone to access their account, check balance and transferring money. Most importantly all these facilities does not require high end smartphone and even a ordinary smartphone can be used.

How many members in a family can open the account?
Two members in a family can open the account.

What are the documents required for opening the account under PMJDY?
There is a minimal document required.

What if you don’t have required documents, can you still open the accounts?
Individuals with no required documents can still open the account. And these accounts are called “Small Accounts”.

What are the benefits of accounts opened under PMJDY?
Account under Jan Dhan Scheme offers multiple benefits. Every account holder will get accident insurance cover of 1 lakh and free life insurance cover of 30,000. an RuPay debit card. But these benefits are only for individuals who open the accounts before January 26th, 2015.

Can existing account holders open Jan Dhan Account?
The main objective of PMJDY was to open accounts for individuals with no bank account. However in the initial days of launching the scheme, many existing holders managed to open the account in order to get the benefits, as banks could not scrutinize each and every individual. However, recently it was stated by the government that even existing account holders can get accidental insurance benefit of 1 Lac after they are issued RuPay card and there is no need to open separate account.

What if address proof of present address is not available
This is the most common question faced by migrants since they have current address would be different than the one mentioned on the address proof submitted. In such cases, individuals will have to submit a simple declaration about the current address.

What is the withdrawal limit and deposit limit
Withdrawal limit is set at Rs. 10,000 per month whereas deposit limit is less than Rs. 1 Lakh.

How to avail overdraft facility of Rs. 5000?
Banks requirement to avail overdraft facility is satisfactory operation of bank accounts for minimum 6 months. Post that, sanction would be given to one overdraft account per household.

What if RuPay card is not issued after opening the account?
As of now, the issuance of RuPay debit card is little slow since many of Indian banks have not adopted the RuPay payment system. So government has asked all the banks to speed-up the process.

What is the account opening fee?
There is no fee to open the account. It is totally free.

If I have any query regarding opening the account, how can I get it resolved?
Government of India has set-up two helpline numbers 1800-180-111 and 1800-110-001 for information or queries related to this Yojana.

Top Differences between RuPay Card vs Mastercard, Visa and AmEx

RuPay card is India’s answer to the two most dominant market transaction processing players in the world Visa, MasterCard, AmEx owned by Visa Inc., MasterCard Inc. and American Express Co. respectively. India is now the sixth country in the world to have domestic payment gateway system. Other five countries are US, Japan, China, Singapore and Brazil.

Having our own domestic card payment network which helps in electronic money transfers will help both banks (between 200-250 member banks) and consumers in the following way:
  • Processing Fee: Since every transaction through RuPay will take place within India, the banks will have to pay less service charge to the payment gateway as compared to Visa, MasterCard and others. For e.g. If a person does a transaction of say Rs. 2,000 then banks will have to pay around  Rs.. 2.50 when RuPay is used whereas for the same transaction amount, Visa or Mastercard will charge Rs. 3.25. Technically speaking, transactions done through international cards is processed in foreign country which involves higher charge which helps in generating profit for Visa/MasterCard whereas RuPay transactions would happen domestically so charge would be less.
  • Faster transactions: Since processing would be down within India the transactions would be faster as compared to other cards.
  • International Acceptance: As of now RuPay card doesn’t have international acceptance, whereas Visa or Mastercard have been in the market since many years and accepted by most of retailers online or offline such as Amazon, eBay, Walmart and others. Also National Payments Corp of India (NPCI) who promotes RuPay card is working hard to spread it’s acceptance worldwide by partnering with Discover Financial Services and Japan Credit Bureau (JCB). Read more about where you can use RuPay card and how to use the card for online payments
  • Quarterly Fee: In case of Visa and others banks have to pay a quarterly fee which won’t be required in case of RuPay.
  • Card Type: Currently RuPay offers only debit card whereas Visa and MasterCard offers debit, credit and debit card. However RuPay credit card would be made available hopefully by March 2015.
  • Entry Fee: In case of international cards banks have to pay entry fee to be a part of their network which is not the case with RuPay card i.e. no joining fee for the banks.
  • Member Banks: RuPay card is offered by public sector, select private banks, rural and co-operative banks (total 200-250 member banks) whereas others don’t include such small banks in their network. Checkout eligibility for getting RuPay card and withdrawal limit.
Also to increase it’s spread recently Government of India launched Jan Dhan Scheme under which every account holder would receive RuPay debit card. See also Jan Dhan Yojana benefits. This will directly increase RuPay’s use.

How to apply for RuPay Card

We have seen a lot of MasterCard and Visa. It is time now to switch over to a card scheme which is more Indian. It looks like that India is now ready to welcome its very own card and payment scheme named as RuPay.

RuPay is going to be an Indian venture into the world of card schemes. However, before you jump the guns, you should know that although RuPay is India’s brainchild, it is not hundred percent Indian. RuPay cards are being created in affiliation with Discover Financial Services, which as we all know, is a US based financial company. Nonetheless, RuPay is going to be more Indian than American.

How to apply for RuPay card?

Many public banks of India have already started offering the RuPay card to the consumers. Therefore, if you want to get the RuPay card you can ask your bank for it. The application process is pretty simple depending upon the bank.

While most of the private banks issue the debit cards over the phone after verifying your identity (by asking the TPIN number), the government or public banks require you to fill the form and follow a process to get the new debit card. You can call up your bank and ask about the process to get the RuPay card issued.

Not many private banks are offering the RuPay cards at this time but it is expected that it will be available soon with all of them. The Reserve Bank of India has mandated RuPay card for all the banks but they have been given some time to get it incorporated in their systems.
If you are an existing customer of the bank which already offers the RuPay card then you can apply for a new debit card. If you are opening a new bank account then at the time of depositing the money you can ask the bank to issue the RuPay card.

Will MasterCard and Visa cards be phased out?

No. Reserve Bank of India has no such plans to phase out the existing and popular Master and Visa cards. In fact, the users of these cards will be able to continue using these cards as they have done before.

With the introduction of RuPay card, there will be a tough competition for these financial giants though. You will be able to use your existing debit cards at all the ATM machines and for online shopping as you used to do it before.

What are the benefits of RuPay card?
There are several benefits of using the RuPay card for the Indians. Since Master and Visa cards are provided by the foreign financial institutions the transaction costs are higher. With RuPay cards, the cost of transaction will be lesser because it will happen within India involving no international processing. People will also enjoy bigger savings due to the low transaction fees.

However, there are certain disadvantages too. For instance, while Master and Visa cards offer the reward points 1on every purchase, there is no such thing with the RuPay cards.

Monday, September 22, 2014

'Jan Dhan' Scheme: National Payment Corp Scrambles to Issue RuPay Cards

'Jan Dhan' Scheme: National Payment Corp Scrambles to Issue RuPay CardsAlthough close to 4 crore bank accounts have been opened under the Jan Dhan Yojana so far, there is a huge backlog in the issuance of the Rupay cards by the National Payment Corporation of India (NPCI), the sole issuer of ATM cards for these new accounts.

Over the weekend, Financial Services Secretary G S Sandhu had said that banks had opened 4 crore accounts so far and mobilised about Rs. 3,700 crore as deposits in these accounts.

"Although the number of accounts opened are very high, about 20 lakh (RuPay) cards have been issued so far," National Payment Corporation of India (NPCI) managing director and chief executive A P Hota told PTI.

There is a lag in production of cards which usually requires three weeks to get cleared, according to Mr Hota.

"Personalisation (of cards) takes time because the name has to be embossed on the card. This is such a big order coming all of a sudden. Nobody expected that in one go so many accounts will be opened," he said.

However, he said the backlogs are likely to be cleared in next three weeks.

The scheme was launched by Prime Minister Narendra Modi on August 28 with an aim to boost financial inclusion.

Under the Jan Dhan scheme, account holders will get an overdraft facility of Rs. 5,000. They would also be provided with RuPay debit cards and Rs. 1 lakh accident insurance cover.
The government has envisaged to provide bank accounts to 7.5 crore people by January 26.

Nabard to highlight co-op role in RuPay implementation

The initiative of South Canara District Central Cooperative (SCDCC) Bank Ltd to make primary agricultural cooperative societies (PACS) as part of the payment system under the RuPay Kisan credit card will be taken as a model by Nabard.

GR Chintala, Chief General Manager of Nabard, Bangalore, told Business Line here on Saturday that the Nabard will issue a circular in this regard in another one-and-half months. 

The initiatives of Raigad and Rampur district central cooperative banks in Maharashtra and Uttar Pradesh, respectively, will also be showcased as models. Highlighting the SCDCC Bank model, he said both the tiers of cooperative banking have retained their identity while implementing RuPay cards. 

Here PACS, under SCDCC Bank’s jurisdiction, directly give loans to farmers. For the implementation of RuPay card, these societies open accounts in the books of SCDCC Bank.
Though the accounts are maintained at SCDCC Bank, the funds are routed in such a way that the farmer need not approach the SCDCC Bank branch. He said that the farmer will continue to transact at the micro ATMs at PACS level. 

In Raigad, farmers are the members of PACS but they have their loan accounts at the branches of DCCB (district central cooperative bank). All the accounts are transacted through the DCCB in Raigad. 

The Raigad model will be suited for those districts where the loans to farmers are extended directly through DCCB branches. 

Those districts that follow the practice of extending loans to farmers through PACS can study the SCDCC Bank model. 

He said that 167 PACS come under SCDCC Bank. It has jurisdiction over the revenue districts of Dakshina Kannada and Udupi. The boards of 163 PACS have given their nod for being a part of the implementation of RuPay Kisan credit cards to farmers.