Saturday, January 24, 2015

Next phase of Jan-Dhan to offer a range of insurance, pension services

Next phase of Jan-Dhan to offer a range of insurance, pension services
PM Narendra Modi said the banks should redouble efforts in financial literacy and seeding of Aadhar numbers with bank accounts needs to improve.
 Prime Minister Narendra Modi on Saturday outlined the next phase of the Jan-Dhan Yojana to include credit, insurance and pension as he complimented bankers for near 100% coverage of households under the massive financial inclusion drive.

The Pradhan Mantri Jan-Dhan Yojana is a key policy plank of the Modi administration's vow to eradicate what it calls "financial untouchability". Each bank account comes with an accident insurance cover, a RuPay debit card and a life insurance policy of Rs 1 lakh. Account holders will also be provided an overdraft facility of Rs 5,000 later. 
 "Well begun is half done. The Pradhan Mantri Jan-Dhan Yojana provides a platform for changing the economic condition of our people," Modi told bankers in his email.

"We need to build on this success and leverage these accounts to provide our citizens a wide range of credit, insurance and pension services. We also need to maintain high standards of customer service. This is the next phase of Pradhan Mantri Jan-Dhan Yojana," the PM said.
He said the target set for opening bank accounts for all households has been surpassed well ahead of the target date of January 26, 2015. "By opening 11.5 crore new accounts in a very short span, we have achieved a coverage of 99.74% of all households in the country. I congratulate you for your extraordinary efforts," the PM said in his email.

He said doubts were expressed when the drive was launched but the bankers had proved skeptics wrong by achieving "what appeared to be impossible".

"This feat alone should motivate you, as well as others to work to make our dreams a reality," the PM said.
Modi said the banks should redouble efforts in financial literacy and seeding of Aadhar numbers with bank accounts needs to improve. "Bank Mitras need to be enabled to carry out RuPay card and Aadhaar enabled transactions in villages itself," the PM said.

"I want you to work to ensure that each account holder enrolls for Aadhaar and seeds it in the bank account. This needs to be done for all accounts. I am sure you will do this seeding with the same zeal you showed in driving bank account opening," he said,

He said most development activities were hindered by the single disability of not having bank accounts but now that it been overcome, "benefits have already started flowing to people through some of the "direct benefit transfer" schemes. This not only ensures that benefits reach people directly, but also utilizes your accounts well," he said.
"This is your great contribution to nation-building. We will ensure that many more schemes utilize the DBT platform," he said.    

Tuesday, January 20, 2015

11.5 crore Jan Dhan accounts opened; New Guiness Book of World Record: Most of India is banked: Jaitley

"Most of India today is included in the banking system," Jaitley said, adding that more than Rs 9,000 crore has been deposited in the Jan Dhan accounts.

As many as 11.5 crore bank accounts have been opened under the Pradhan Mantri Jan Dhan Yojana, exceeding the enhanced target of 10 crore and covering 99.74 per cent of households, finance minister Arun Jaitley said today.

"Most of India today is included in the banking system," he said, adding that more than Rs 9,000 crore has been deposited in the Jan Dhan accounts.

Prime Minister Narendra Modi announced the financial inclusion scheme in his first Independence Day speech last year. It was launched in August with a target to open bank accounts for 7.5 crore poor persons by January 26, 2015. The target was later increased to 10 crore accounts.

Addressing a press conference here, Jaitley said the government would use these bank accounts to pass on benefits to individuals under its various social security schemes.

Financial Services Secretary Hasmukh Adhia said that even Guinness Book of World Records has recognized the achievements made under Pradhan Mantri Jan Dhan Yojana.  

In its citation, the Guinness Book said: "Most bank accounts opened in one week as part of the Financial Inclusion Campaign is 18,096,130 and was achieved by the Department of Financial Services, Government of India from August 23 to 29, 2014."

Exclusion of a large number of people from the banking network was inhibiting growth, Jaitley said. "Financial Inclusion is one of the top most priorities of the government. PMJDY is the biggest financial inclusion initiative in the world."

He said that out of the accounts opened, 60 per cent are in the rural areas and 40 per cent in the urban areas. Share of female account holders is about 51 per cent.

Jaitley said that RuPay cards have been issued to more than 10 crore beneficiaries who will get a benefit of personal accidental insurance of Rs 1 lakh besides a life insurance cover of Rs 30,000 for eligible beneficiaries. 

Describing the scheme as "a game changer for the economy", the minister said that it would provide the platform for Direct Benefits Transfer (DBT) and help in plugging leakages in subsidies.

Overall, public sector banks alone opened 9.11 crore accounts under PMJDY, followed by regional rural banks which opened about 2.01 crore accounts. On the other hand, 13 private sector banks together open just 37.58 lakh accounts.

According to Adhia, all these accounts are being used for payment of wages under the MNREGA scheme and LPG subsidy. More than Rs 33,000 crore towards MNREGA, LPG and other benefits will be routed through the bank accounts annually.

On the future of the scheme after January 26, Jaitley said the government will take a view on it later.

Responding to a question of duplication of accounts, the minister admitted that there might be some such cases and that was the reason for enhancing the target to 10 crore accounts.

The issuance of the RuPay cards to account holders would encourage use of plastic money and help in moving towards a cashless society, Jaitley said.

The proposal to provide overdraft facility in such accounts would also act as micro finance and prevent people from taking loans at exorbitant rates from money lenders.

Jaitley said that most of the country has been covered by the PMJDY, except those areas which have poor connectivity, are impacted by left-wing extremist and are inaccessible.

Sunday, January 11, 2015

Private banks lag behind PSU lenders in opening Jan Dhan a/c

Private banks lag behind PSU lenders in opening Jan Dhan a/cPrivate sector banks are way behind their PSU peers when it comes to opening financial inclusion accounts under the Prime Minister's Jan Dhan Yojana, with just about 30 lakh in over four months.

The state-owned banks have opened 8.62 crore such accounts in the same period. The number of such accounts opened by even regional rural banks stands at 1.92 crore.

Private banks have a market share of about 20 percent, but their contribution in this flagship financial inclusion programme of the government is only about three percent.

As per the latest Finance Ministry data, 13 private sector banks have opened 30.47 lakh Jan Dhan bank accounts as against 8.62 crore by state-owned banks as on January 7.

Prime Minister Narendra Modi launched the financial inclusion scheme on August 28, 2014. The initial target was to open 7.5 crore such accounts, but the later it was revised upwards to 10 crore to be completed by January 26, 2015. However, this target has already been achieved.

Taking into account the regional rural banks, so far a total of 10.84 crore Jan Dhan accounts have been opened so far by all banks in the country.

Among private banks, just three of them -- HDFC Bank, ICICI Bank and J&K Bank -- account for about two-third of total accounts opened by private sector lenders.

HDFC Bank has opened 7.8 lakh such accounts, followed by ICICI Bank's 6.67 lakh and Jammu and Kashmir Bank's 6.06 lakh.

Country's third largest private sector lender Axis Bank have opened 2.45 lakh accounts and Kotak Mahindra Bank has opened just 54,000 accounts.

As far as public sector banks are concerned, they have opened more than 8.62 crore Jan Dhan accounts.

Country's largest bank SBI has opened 2.15 crore accounts, followed by Punjab National Bank (61.74 lakh), Bank of Baroda (58.47 lakh), and Canara Bank (53.79 lakh).

The main features of the PMJDY scheme include Rs 5,000 overdraft facility for Aadhaar-linked accounts, RuPay Debit Card with inbuilt Rs 1 lakh accident insurance cover.

Besides, account holders under the scheme will get life insurance cover of Rs 30,000. This was additional benefit announced by the Prime Minister during the launch of the scheme. Private banks lag behind PSU lenders in opening Jan Dhan a/c

FM: Benefits of Demographic Dividend will flow only if our Population is Healthy, Educated and Properly Skilled

Meets Representatives of Social Infrastructure, Human Capital and Development Groups as Part of his Pre Budget Consultative Meeting

The Union Finance Minister Shri Arun Jaitley said that apart from on-going schemes and programmes for the marginalized and vulnerable section of the society, the Government has initiated various special social sector programmes. He said that these programmes among others include Swacch Bharat Mission (Gramin), which will set the base for improving sanitation and health standards; Pradhan Mantri Jan Dhan Yojana (PMJDY) and RuPay debit card which will extend financial inclusion and give financial empowerment to the account holders at large.

The Finance Minister, Shri Jaitley was making his Opening Remarks during the Pre Budget Consultative Meeting with the representatives of Social Infrastructure, Human Capital and Development Groups. He said that more than 63% of the population is in the age group of 15-59 years, broadly termed as India's demographic dividend. He said while this young population provides India a great opportunity, but it also poses a great challenge to the Government. He said that benefits will flow only if our population is healthy, educated and properly skilled. In this context, he said that investments, especially in social infrastructure that build-up human capital are crucial. Shri Jaitley said that India needs to take advantage of this demographic window in the next couple of decades and garner its benefits.

Therefore, the Finance Minister said that his Government has put thrust on skill development as well as on 'Make in India' as the Government's endeavour to improve employability and create large employment avenues for the youth among others. He said that skill development has been given focused attention for which a dedicated Department of Skill Development and Entrepreneurship has been created in the Central Government. He said that the challenge for the country now is in planning and acting towards converting its potential demographic force for enhancing opportunities of growth by dovetailing the quality of manpower to the requirements of employers, both domestic and international.

The Union Finance Minister Shri Arun Jaitley said that emerging trends indicate the growth deceleration in India has bottomed-out. The Finance Minister said that significant downward trend in inflation has also been recorded in the second and third quarter of 2014-15. He said that external environment has also largely turned in India's favour. In such a back drop, the Finance Minister said that domestic policies to achieve macro-economic balance and the on-going process of economic reforms would lend further strength to the recovery of the economy.

Various suggestions were received from the representatives of the different social sector groups during the meeting. Major recommendations include that immediate steps be taken in the budget to prevent any scope of diversion and misallocation of funds meant for the benefit of dalits and adivasis. This will result in about Rs. 30,000 crore to be available for the development of Scheduled Caste and Scheduled Tribes. Other suggestions include to set apart in the coming budget the entire 16.2% for Scheduled Castes and 8.2% for Scheduled Tribes, establishment of well designed and dedicated institutional mechanism for Schedule Caste Sub Plans (SCSPs) Tribal Sub Plans (TSPs) separately at the Centre and State levels, creation of a separate unit within Niti Ayog with power to review, monitor and direct to ensure effective implementation of the SCSP and TSP as well as setting-up of a nodal unit headed by a Joint Secretary with the responsibility of preparation of Annual SCSP Plans and their subsequent implementation.

Other suggestions include adequate allocation for ICDS budget, Mid Day Meal Scheme and for the programmes for the nutrition of mother and child under Food Security Act as well as clear demarcation of funds to remove malnutrition among children of dalits and adivasis etc. Besides this, there was suggestion for budget transparency at local level in order to have better utilization of funds and results of various social welfare schemes at the grass root level etc.

Other suggestions made during the aforesaid meeting include that a mechanism needs to be built to develop entrepreneurship among dalits, schemes to be brought out for developing art and culture of dalit and adivasi communities. Suggestions were also made about proper implementation of Prevention of Domestic Violence against Women Act, appointment of women protection officers, increasing the scope of Nirbhaya Fund to cover the domestic violence against women etc. A suggestion was made that Finance Minister may include a statement in his Budget Speech condemning violence against women showing unequivocal commitment of the Government in this regard.

Some suggestions were also made on investment on youth, especially from those of socially excluded communities, investment in skill and entrepreneurship building, more spending on education and social enterprises, inclusion of youth leadership in CSR activities, higher spending to change the social mindset of people against the use of toilets etc.

Other suggestions include adoption and implementation of the National Competition Policy to push the growth on higher trajectory, adoption and implementation of Public Procurement Act. As public procurement accounts for almost 30% of the total GDP worth US $136 billion annually, therefore, Public Procurement Act would help in promoting the good governance by curbing corruption in public procurement; and adoption of a National Public Procurement Policy; adoption and implementation of Financial Consumer Protection Act, fixing of fiscal management practices by establishment of Parliamentary Budget Office, adoption of international best practices in budgetary planning and reduction of non-merit subsidies among others.

In end, suggestions were also made for enhancement of allocation to education with an emphasis on making functional investment in early childhood and elementary education, enhanced allocation to education to 6% of GDP in line with Kothari Commission and National Education Policy recommendations and enhance allocation to elementary education by 1% to accommodate a cumulative gap in education, enhanced allocation to areas with strongest implications on quality-availability of teaching learning materials, improved libraries and strengthening of the capacity of the resource unit at the cluster level, enhance allocation for research, monitoring and evaluation, address gaps in financial and planning process to ensure full expenditure of allocated funds in education sector among others.

Sunday, January 4, 2015

To ensure high growth trajectory, Narendra Modi government to overhaul banking sector

The Narendra Modi government is embarking on an overhaul of the banking sector to ensure it lends support to country's move towards high growth trajectory. With public sector banks performance lagging behind their private peers on key indicators, the government wants to urgently draw up a reform roadmap that could include revamp of priority sector lending, consolidation and effective use of technology for lending and greater financial penetration.

"...There is a wide disparity in various performance indicators of private and public sector banks and in this context there is a need to rethink on the strategy of PSBs...When the country is trying to achieve accelerating growth of economic development, it is absolutely essential that banking reforms are thought about, deliberated about," Hasmukh Adhia, secretary, department of financial services, said here on the first day of 'Gyan Sangam', banking retreat organized by the finance ministry.

For example, return on total asset by private sector banks is 1.6% compared to just 0.5% for public sector banks. Gross non-performing asset ratio of public sector banks is over 5%, while private sector banks' is pegged at little over 2%.

On all other indicators also private sector banks have shown a better performance that their public sector counterparts.

Prime minister Narendra Modi, finance minister Arun Jaitley, minister of state for finance Jayant Sinha and RBI governor Raghuram Rajan will attend the two-day bankers retreat in the lush green campus of National Institute of Bank Management on the outskirts of the city.

The retreat will attempt to draw up a "concrete" action plan to re-inviogarate the sector, grappling with mounting bad loans.

".... banks and financial institutions are the backbone of the economy. Stronger the bank and financial institutions, stronger would be the growth of the economy," Adhia said adding that the deliberations over the next two days would also focus on the recommendations given by various committees in the past, non-performing assets and credit off take.

Adhia said bankers participating in the retreat had been divided into six working groups to assess issues and draw up plans to be presented to Prime Minister after discussion with finance minister and RBI governor.

External experts including, KV Kamath, ICICI Bank chairman, P J Nayak, ex-CMD, Axis Bank, Paresh Sukhantkar, DMD, HDFC Bank and Bandhan founder Chandrashekar Ghosh have been roped in from the private sector help bankers draw on their skills.

Framework would be drawn up for achieving universal financial inclusion, leveraging technology to improve efficiency, re-thinking priority sector lending, improving risk management, asset quality and recovery, consolidation and restructuring of PSBs and building robust people strategy.

Adhia said risk management and asset quality was a problem area for banks and the government wanted to help them manage it in a better way while pitching for a change in priority sector lending norms that has remained at 40% since 1969 when the guideline was introduced.

"We would like to generate ideas on what could be the priority sector prescription for the banks in view of the present state of the economy...At the moment banks have to lend 40%of their total credit to priority sector which include agriculture loan, loans to minority.., Adhia said adding that the overall economy has seen a major shift from 1969. For example food processing would be very important for agriculture growth, but does not feature on the priority sector lending items, he pointed.

Adhia said consolidation in banks did not necessarily mean only mergers and acquisitions.
"If we have to give better support to banks, if the banks have to play a complimentary role, can we think of some other structures by which it is easy for the banks to manage their affairs, it is easy for them to get capital from the market and it is easy for them to improve the balance sheets," he said. On the issue of financial inclusion, the financial services secretary said that the focus of group discussions will be on how to keep these accounts active and improve the savings rate of the country from 30% to 35% of the gross domestic production (GDP).

"We will be looking that how other financial products such as pension and insurance can be linked with these accounts," he said. Under the government's ambitious financial inclusion scheme, Pradhan Mantri Jan Dhan Yojna (PMJDY), banks have opened around 10.3 crore accounts and 98.4% of the households have been covered.

"We are also seeding these accounts with Aadhaar number and around 33% of the accounts have been linked," said Adhia, adding that Rupay card have been provide to 80% account holders.

The retreat is being held to take forward the government's commitment to reforms in the financial sector, the finance ministry said in a statement. "The growth and change in financial sector ought to be in tune with the development in the real sector," the statement said.

10 crore Jan Dhan accounts, 73% zero balance

PUNE: The government on Friday said that banks had gone past the target of opening 10 crore Jan Dhan accounts and had managed to cover 98% of the households, prompting to now launch a "challenge" to find out if any family remained without access to basic banking facility.

In recent weeks, there has also been a significant increase in the funds deposited in the Jan Dhan accounts with the corpus in the 10.36 crore accounts going past Rs 8,000 crore, according to data available with the finance ministry. But 7.6 crore account holders, which is around 73% of all Jan Dhan accounts, had zero balance on December 30.

"We had done surveys and it shows that across several states we have achieved 100% household coverage. There are some households that are not allowing us access so we will launch a challenge to help find out if there are households that still do not have coverage," financial services secretary Hasmukh Adhia said on the sidelines of the Banker's Retreat here.

He clarified that of the 25 crore households in the census, around 22 crore households had participated in the survey conducted by banks and the percentage of households was based on these. He said that the three-odd crore households lived in gated communities and affluent areas and didn't need help in opening accounts.  

In August, the Narendra Modi government launched an ambitious plan to provide all households with a bank account and had hoped to open 7.5 crore accounts by January. But the target was achieved much earlier and the government realized that all households were still not covered, prompting it to scale the target, which has now been achieved. 

The household coverage report available with the government showed that there are few states such as Manipur (78%), Nagaland (76%), Meghalaya (83%), Arunachal Pradesh (84%), Odisha (86%), Sikkim (89%) and Jammu & Kashmir (89%) which still have a large number of households without access to a bank account. But several of the traditional laggards such as Bihar, West Bengal and Uttar Pradesh have near universal coverage.

In some of the districts such as Meghalaya's East Jaintia Hills and South West Khasi Hills, there is zero coverage. Adhia told TOI that special attempts will be made to reach to this population so that no one is left behind. In addition, he said that banks are being asked to sensitize account holders about using the RuPay debit card within the first 45 days so that they are entitled to the insurance facility.  

Jan Dhan: enrolees over 60 short-changed on life cover

A RuPay card under the Jan Dhan scheme may not be enough for nominees to get the death benefit of ₹30,000 when an account holder passes away. Some nominees found this out recently, to their surprise.

Gowramma (name changed), from Karnataka, passed away recently. State Bank of Mysore, where she is a Jan Dhan account holder, rejected the nominee’s claim for the death benefit of ₹30,000 as the deceased was above 60 years of age.

According to the Finance Ministry approved norms for life cover under the Jan Dhan scheme, the eligibility for risk cover ceases when a person turns 60.

These guidelines were framed long after the launch of the scheme and many elderly people had enrolled for the same when it was launched by Prime Minister Narendra Modi in late August. Under the current norms, the account holder will have to exit the life insurance scheme the day he or she turns 60.

State Bank of Mysore has till date received four cases each claiming death benefit of ₹30,000 under the scheme.

Of them, two claims were rejected straightaway as the deceased were aged above 60, sources in the bank said. 

The claims for the other two cases are being processed though the bank is not clear as to which LIC office the claim papers have to be sent for final settlement.

Confusion over claims

Public sector banks are in a state of confusion on the issue of handling claims. Even accident insurance claims are reaching the doorsteps of these banks. 

Although the banks have till date issued 8.4 crore RuPay cards for over 10 crore Jan Dhan accounts, they do not want to foot the death benefit bill for the life cover. They are only keen on having a foolproof mechanism to pass on the claims to Life Insurance Corporation. Both LIC and the public sector banks are yet to firm up a seamless mechanism for claims settlement under the life cover promised under scheme.

Meeting held

On Wednesday, representatives of the Finance Ministry, Indian Banks’ Association and public sector banks held a meeting to discuss the nitty-gritty of claims settlement for the ₹30,000 death benefit promised under the scheme.

There is a need to map LIC branches with those of the banks so that claims could be processed seamlessly, said the chief executive of a public sector bank.

Currently, banks are not fully aware about how to take the process forward in case nominees come up with claims. 

Indications are that the nominees will now be asked to furnish an affidavit confirming that the deceased was the head of the family or that he/she was an earning member of the family, and in the age group of 18-59.