Showing posts with label Jan Dhan Yojana scheme. Show all posts
Showing posts with label Jan Dhan Yojana scheme. Show all posts

Friday, December 23, 2016

All you need to know about RuPay card and its value post demonetisation

RuPay L

November 8th, 2016, would be marked as a historical day when high-denomination currency notes were demonetized by the Modi government in a bid to curb black money. Although the move drew both wide criticism and appreciation from different people, it accelerated the pace of non-cash payments in India, which is sure to give the use of plastic money a huge boost.
Interestingly, the current global payment card network industry is dominated by just a few players. Among these global players, Visa and MasterCard enjoy a dominant market share.
What is RuPay card?
RuPay is an Indian card scheme which was launched by the National Payments Corporation of India (NPCI) in March 2012 as an alternative to the MasterCard and Visa card schemes. Started as IndiaPay, it was later renamed as RuPay, which is a combination of rupee and payment.
RuPay also provides payment gateway services for online payments. It is accepted at almost all ATMs and most of the e-commerce websites (approx. 10,000). About 240 banks, including all major public sector banks, currently issue RuPay cards to their customers.
Need/Objective of RuPay cards
Banks while issuing Visa or Mastercard have to incur extra cost which is paid to these companies. A low-cost alternative suitable for the Indian banking channel was needed so that debit cards could have a reach in the rural banking system also.
To act as a vital tool in the financial inclusion drive by involving all economy classes in the banking system. Secure the data of Indian customers within the country as they do not have to share the information to international players like Visa or MasterCard. Reduce the usage of cash and to allow all the financial transaction to be a part of the economy
Status of RuPay cards in India
RuPay cards hold about 40% market share in India , second to VISA cards
Around 30 crore cards have been issued since RuPay’s inception in 2012.
Out of total cards issued, the share in Jan Dhan account is around 18 crore
Average transaction size is INR 3,045 in ATMs
Waiver of various fees and charges makes it far cheaper option for the banks as compared to VISA and Mastercards.
How demonetization impacts RuPay cards
“The demonetization move has definitely given a great boost to the circulation of RuPay cards as more accounts are intended to be opened and due to shortage in currency notes, the transaction size as well as the number of transactions would also increase. It comes as an ideal opportunity to promote the usage of RuPay cards as a lot of cashless transactions are expected to happen,” says Nitin Vyakaranam, Founder & CEO, ArthaYantra.
Even the dormant cards which were issued with bank accounts would be used.
Challenges
The real challenge is the penetration in the mainstream business as most of the cards were issued during the Jan Dhan schemes and most of these accounts have zero balances. Also, the transaction size is very low.
About a half of the population does not have a bank account despite the rollout of schemes like Jan Dhan Yojana and No-Frill accounts. The real difficulty lies in making the banking infrastructure strong and made available to the remotest places in India. “As per the World Bank data, there are 13 bank branches per 100,000 of adult population.
That makes it 7,692 customers per bank. But the distribution of these branches is uneven. With other products and services by RuPay like Kisan cards, Milk procurement cards and other services targeted at rural areas, the Indian banking system needs to reach every village to make the scheme a success and also help in empowering the economically-backward sections of the country,” says Vyakaranam.

Monday, September 14, 2015

One year of Jan Dhan: Many loose ends yet to be tied

One year of Jan Dhan: Many loose ends yet to be tied

Paramjit Kaur, a resident of Salempur village in Punjab's Ludhiana district, can barely hide her excitement when asked about the launched last year. She was one of the first women from her village to open what she calls the "zero balance" account. And she is one of the lucky few to have a passbook.

The entries, all in English, show her as a student (she is actually a home maker) and that she has not made a single transaction since the account was opened on August 28, 2014. Her father's name is given in the column for wife and the nomination column says "not registered".

All the people this reporter spoke to in the village had opened "zero balance" accounts. Few of them received passbooks. None has received a yet. They were not aware of the benefits of the scheme and did not know about the conditions to claim them.


The situation was no different in the neighbouring Humbran village where 55-year-old enrolled himself for the scheme and has a passbook. But he, too, has not made a single transaction and is yet to receive the RuPay card, making him and others like him ineligible for the overdraft facility and accident and life insurance benefits that come with these accounts.

According to the details of the scheme, an account holder becomes eligible for an overdraft of up to Rs 5,000 only after satisfactory operation of the account for six months and the RuPay card that comes with the account has an inbuilt accident insurance cover of Rs 1 lakh. According to government data, 179 million accounts were opened under the scheme till August 26, 2015. However, only "10 lakh (one million) accounts have been found eligible for overdraft. Out of these, the overdraft facility has been availed by 164,962 account holders."

The sense one gets after talking to a number of bankers is the scheme, though laudable in its objective, is suffering because of procedural complexities. "Since most of these accounts were opened in a great hurry and at organised camps, many entries need to be checked and rechecked. The feedback I receive is that entries, at least in 60-70 per cent cases, with regard to nomination just do not exist. In such a scenario, how can insurance claims be settled?" asked a middle-level banker with a leading public sector bank posted in Ludhiana.

Bankers say the reason so few account holders are eligible for overdraft is many of them have not strictly followed the know-your-client (KYC) norms. Non-existence of mandatory transactions within 45 days of the opening of the account is another reason. "We sent RuPay cards to addresses given by the customers. A majority of them came back to us as those addresses just do not exist. It is a huge problem for us," a Delhi-based banker with another government-owned bank told this reporter.

Bankers also say that since other schemes like the Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and are linked with Jan Dhan accounts, their success will depend on how the loopholes in the Jan Dhan accounts are plugged. "Suppose the premium for any of these schemes is to be deducted from the Jan Dhan account. If there is no transaction and hence no balance, how will the premium be deducted?" observed another banker.

Lack of awareness about the scheme, especially in villages, has created a situation where expectations are turning into disappointment. "All the workers who work in my field had opened Jan Dhan accounts. Once in 15-20 days they go to bank branches to check whether they have received some money. Once they get to know that no amount has been credited, they come back thoroughly disappointed," Jagjit Singh, sarpanch of Chankoin Khurd village in Ludhiana district, told this reporter.

(Our experience with how the Jan Dhan Yojana has unfolded in some villages in Ludhiana district raises questions about the sustainability and effectiveness of the financial inclusion scheme. We must, however, make it clear that we have not conducted an all-India survey, but base our observations on discussions with a few villagers in Ludhiana, selected at random, and a few bankers. The picture may be different in other parts of the country.)


http://www.business-standard.com/article/economy-policy/one-year-of-jan-dhan-many-loose-ends-yet-to-be-tied-115091200834_1.html

Sunday, January 4, 2015

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.

Monday, December 22, 2014

7 things to know about Pradhan Mantri Jan Dhan Yojana

7 things to know about Pradhan Mantri Jan Dhan Yojana
 

New Delhi: On 15th August 2014, Prime Minister Narendra Modi, from the historic Red Fort, had announced the launch of Pradhan Mantri Jan Dhan Yojana (PMJDY). The primary aim of this scheme is to provide poor people access to bank accounts. However, the account comes with some benefits as well.

India TV brings you seven must-know points about PMJDY:

1. The scheme covers both urban and rural areas of India. All bank accounts will be linked to a debit card which would be issued under the Ru-Pay scheme.  Rupay is India’s own unique domestic card network owned by National Payments Corporation of India and has been created as an alternative to Visa and Mastercard.

2. Under this scheme, every individual who opens a bank account becomes eligible to receive an accident insurance cover of up-to Rs 1 Lakh for his entire family.




3. A person who is already having a bank account with any bank need not open a separate account under PMJDY. He/she will just have to get issued a RuPay Card in his existing account to get benefit of accidental insurance. Over-draft facility can be extended in the existing account if it is being operated satisfactorily.

4. Accidental Insurance coverage under PMJDY: Accidental insurance of Rs 1 lakh is available to all RuPay card holders in the age group of 18-70 where RuPay card needs to be used once in 45 days of receipt. Claim intimation should be given to his or her bank where account is maintained within 30 days from the date of accident.

5. Life Insurance coverage under PMJDY. Only one person in the family will be covered and in case of the person having multiple cards/accounts, the benefit will be allowed only under one card i.e. one person per family will get a single cover of Rs 30,000. The claim of Rs 30,000/- is payable to the nominee(s) of account holder who need to submit necessary documents to the Nodal Branch of the concerned  Bank. Government employees (serving/retired) and their families, persons filing Income Tax Return/TDS deductees and persons covered under the Aam Adami Bima Yojana, are ineligible for Life insurance under PMJDY.



6. Once the bank account has been active for 6 months and linked to Aadhar card, the person would become eligible for an overdraft of up to Rs 2,500 which would further be enhanced by the bank to Rs 5000 over time.

7. The scheme also provides incentives to business and banking correspondents who serve as link for the last mile between savings account holders and the bank by fixing a minimum monthly remuneration of Rs 5000.

Sunday, December 7, 2014

Banking on rural deposits


The Jan Dhan Scheme has by far been the quickest and most expansive financial inclusion drive launched in the country. It was launched with a set target for the existing banks. The results are quite amazing and actually provide some guidance to the new players entering the market as ‘payments’ or ‘small’ banks.

So far, 81.2 million accounts have been opened of which 60% are in rural areas. Banks, primarily public sector banks (PSBs), have issued 51.1 million RuPay cards for these accounts. Deposits in these accounts were R6,355 crore as of November 26. Interestingly, there were 60.7 million zero-balance accounts, which implies an average of R3,100 in the non-zero accounts. This scheme has been aggressively implemented and the focus was more on opening accounts with minimum KYC norms to expedite the process. The idea is laudable as it is a quick way of accomplishing a task. But the high zero-balance accounts, as well as low balances on an average, actually signal that these households typically do not have the money to keep as deposits or are sceptical of the same. Alternatively, they may not really be interested in such deposits, notwithstanding the add-ons of a debit card as well as possible future credit and insurance going forward.

Therefore, RBI’s decision to start issuing licences to payments banks that will take savings bank deposits and invest only in government securities for a 1-year duration or less and, to a certain extent, in other bank deposits, will pose a challenge to the licensees as they will have to create a superstructure to keep their business going. All options are open and telecom companies and other card-based companies can tie their businesses with bank accounts and probably be more successful than banks as there is already an existing business relationship with the customer. The question is will these households actually keep the deposits with these banks or not?

Post offices qualify for such a licence and are well poised to leverage this market. They would only have to scale up and not really have to start afresh like the supermarkets or telecom companies. Their deployment of funds too would change—passing it on to the Centre and states; they will have to deploy all in short-term paper. Their operations too have to be altered unless a new Post Office savings bank is opened in the same premises, as there are other products being offered which can no longer be done—postage, fixed and recurring deposits, and small savings (including the Kisan Vikas Patra). Regulation does not permit the same and, hence, a new bank may be created for this purpose. However, for an completely new entrant, the establishment costs would be considerable.

The model, for any entrepreneur, makes a lot of sense as the bank will get deposits at 4% or free (current accounts) and can earn a good 7-8% return. Operational costs will be low at 1-2%, and hence a return of 1-2% can be maintained without any encumbrance of NPAs or capital as these variables will become irrelevant given the business model. However, if fresh infrastructure is to be created then there would be high overheads.

The small bank concept is, of course, more challenging as 75% of the funds have to go to priority sector lending, to the farm sector and the SMEs, with a cap of R25 lakh for 50% of the loans. This will be on top of the CRR and SLR requirements. Intuitively, it can be seen that the cost of servicing these small-sized loans would be high for these banks which will also have to open up brick-and-mortar branches, unlike the payments banks.

Additionally, both these segments are vulnerable. When the monsoon fails, the farm loans go bad and the cycle of monsoon failures has been moving with shorter amplitudes. Further, the economic cycle too has become more unpredictable and, often, a sustained industrial slowdown results in higher NPAs being generated as they get affected almost immediately when the economy slows down. This being the case, the pressure on quality would be high. This will also pressurise their capital and hence will be onerous, unlike it is for commercial banks where the portfolio is well spread across all sectors, smoothening the risks .

MFIs and NBFCs can apply here and it will be interesting to see if they are attractive to these players. This will hold for MFIs who would get access to deposits in a formal manner and can lend to these segments where there is a modicum of familiarity. NBFCs, too, may be inclined to consider this option given that the regulatory structure has become a little more intense for them in their normal line of business.

The crux of these banks working well would depend on their ability to garner deposits in the rural areas in particular. The Jan Dhan Yojana warns that it may be difficult to get the deposits, though opening accounts would be easy. It will require a lot of awareness. Counter-intuitively, if the Jan Dhan programme that offers the promise of credit and insurance has not caught on, would a plain vanilla deposit be convincing to the household. This is where the payments bank should work and linking one’s own product to the deposit could be a good way of making a start.

Sunday, November 16, 2014

FinMin review meeting with chiefs of PSU banks, FIs on Nov 20

FinMin review meeting with chiefs of PSU banks, FIs on Nov 20
The Finance Ministry has called a meeting of chiefs of public sector banks on November 20 to review their financial performance and Jan Dhan Yojana, among other things.

Chief executives of financial institutions like Nabard and NHB are also attending the meeting.
"Finance Minister Arun Jaitley may attend the meeting. If the Minister is unable to, Department of Financial Services Secretary Hasmukh Adhia will head the review meeting," a source said.

The main agenda of the meeting is discussing financial performance at the end of the second quarter, sources said.

The progress of Pradhan Mantri Jan Dhan Yojana (PMJDY) is another important issue that will be discussed in the meeting.

The issue of asset quality and recovery of bad loans would also be discussed. Credit to farm sector, MSME, housing and education loans may also come up talks, sources said.

Besides, there would be deliberation on lending to stalled projects.

The Prime Minister on August 28 launched the the PMJDY scheme to boost financial inclusion. About 7 crore bank accounts have been opened under Jan Dhan scheme so far.

As on November 10, 7.24 crore accounts have been opened under Pradhan Mantri Jan Dhan Yojana (PMJDY) of which 4.29 crore in rural and 2.95 crore are in urban areas. RuPay Cards have been issued in case of 3.97 crore accounts.

The Yojana 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.

The main features of the PMJDY scheme include Rs 5,000 overdraft facility for Aadhar-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.

Under the scheme, the account holders will get an overdraft facility of Rs 5,000.

Blistering pace: 6.5 crore bank accounts opened so far under Jan Dhan scheme


Banks, especially public sector and regional rural banks, are going all out to open accounts for individuals from low-income segments.

Under the Prime Minister Jan-Dhan Yojana (PMJDY), which was launched on August 28, banks collectively opened a whopping 6.51 crore basic savings bank deposit accounts (BSBDA) in just two months. 

Going by the blistering pace at which banks are opening accounts, in all probability, they will surpass the target of reaching 7.5 crore un-banked families by January 26, 2015.

Of the 6.51 crore new accounts that have been opened so far, 4.95 crore are with zero balance, as per data submitted by banks to the Finance Ministry. 

Banks mobilised deposits aggregating ₹4,857 crore from the remaining 1.56 crore new accounts. What this means is that new customers, on average, deposited ₹3,113 per account. 

Public sector banks and regional rural banks accounted for 81 per cent and 16 per cent, respectively, of the total accounts opened under PMJDY. The response of private sector banks to the Yojana has been lukewarm.

While banks went all out to open the accounts, they could not issue “RuPay” debit cards to almost half of the new customers.

RuPay cards

“With banks aggressively taking up the task of opening accounts under the PMJDY, supply of RuPay cards lagged demand. However, steps have been taken to augment the supply of cards.

“By December 15, all customers who opened accounts under the PMJDY will receive the cards,” said a senior public sector bank official. PMJDY is a National Mission for Financial Inclusion. It seeks to ensure access to financial services, namely, banking/savings and deposit accounts, remittance, credit, insurance and pension in an affordable manner.

RuPay debit card is the home-grown card payment scheme launched by the National Payments Corporation of India to rival global payment processing giants Visa and MasterCard.

Under PMJDY, the debit cards comes with ₹1 lakh accident insurance cover, and an additional ₹30,000 life insurance cover for those opening bank accounts before January 26, 2015.
The performance of the BSBDA is monitored and overdraft facility of up to ₹5,000 is given in a phased manner. 

To remain eligible for the ₹1 lakh accident insurance cover that comes with the BSBDA, the RuPay cards have to be used at least once in 45 days.

At a recent meeting, Finance Ministry mandarins told top bankers that mere issuance of cards will not suffice.
The cards have to be activated at the earliest and made operational.

Monday, November 10, 2014

5 crore Jan Dhan accounts outside Rs 1 lakh accident insurance ambit

5 crore Jan Dhan accounts outside Rs 1 lakh accident insurance ambit

Five crore of the seven crore bank accounts opened under the government's flagship financial inclusion programme, Pradhan Mantri Jan Dhan Yojana (PMJDY), have fallen outside the ambit of the in-built Rs 1 lakh accident insurance cover as these accounts have seen no transaction since they were opened.

Bankers and insurance industry executives say rules require at least one transaction in the account in the preceding 45 days for an account holder to be eligible for the insurance cover. But of the seven crore accounts opened under the scheme, only 1.71 crore accounts have seen transactions while the rest have had zero balance since they were opened, which means there have been no transactions in these accounts.

PMJDY, which was launched by Prime Minister Narendra Modi on August 28, seeks to cover 7.5 crore un-banked households in the country in the first phase. It provides Rs 5,000 overdraft facility for Aadhar-linked accounts and RuPay debit card, besides a Rs 1 lakh accident insurance cover "If an account holder meets with an accident during the 45 days when there has been no transaction in his account, he is not entitled to the insurance cover," said a senior executive with state-run Vijaya Bank who is involved in implementing PMJDY.

5 crore Jan Dhan accounts outside Rs 1 lakh accident insurance ambit

The executive said most of the account holders seem unaware of the '45-day clause'. "We are trying to explain it to them," he said. National Payment Corporation of India (NPCI), which has an agreement with private sector HDFC Ergo to provide this insurance cover, is of the view that the accident insurance should not be looked as a plain vanilla welfare measure. "These are initial days of the scheme and there is no need to get disheartened," said AP Hota, managing director and CEO of NPCI."Most of these accounts will be soon linked with various direct benefit transfer schemes and then there will be regular transactions."

The government is all set to launch a modified direct benefit transfer for liquefied petroleum gas (LPG) on a pilot basis in 54 districts across the country. Under the scheme, LPG consumers will be able to get subsidy directly in their bank accounts even if they do not have Aadhaar numbers.

So far, under PMJDY around 32% accounts have been seeded with Aadhaar and around 4 crore have been issued the Rupay debit card.The prime minister had earlier said that a lot of effort will be required in promoting financial literacy among the new account holders. "New accounts also need to be kept alive and properly utilised.

Aadhaar numbers will need to be seeded in bank accounts," he had said.Towards this end, the finance ministry is working on to increase the reach of banks through various models, including banking correspondents to facilitate banking facilities.
Five crore of the seven crore bank accounts opened under the government's flagship financial inclusion programme, Pradhan Mantri Jan Dhan Yojana (PMJDY), have fallen outside the ambit of the in-built Rs 1 lakh accident insurance cover as these accounts have seen no transaction since they were opened.

Bankers and insurance industry executives say rules require at least one transaction in the account in the preceding 45 days for an account holder to be eligible for the insurance cover. B ..

Jan Dhan balance tops Rs 5,000 crore mark, nearly 7 crore accounts opened

 

The Pradhan Mantri Jan Dhan Yojana has so far managed to bring over Rs 5,000 crore into the formal banking system, as close to seven crore account holders have started depositing cash into their bank accounts. A large part of this money was hitherto kept at home, with little or no productive use.

Latest data collated by the finance ministry showed that on November 3, 6.98 crore bank accounts had been opened across the country, with Rs 5,300 crore parked in them. Just a tad under 4 crore RuPay cards had been issued to these account holders, with the remaining expected to get the ATM card over the next few weeks, officials said.

At the current pace, it's a matter of days before bank employees help the government scale the target of opening 7.5 crore bank accounts under the financial inclusion scheme launched on August 29. The government was looking to achieve the target before January 26, 2015, well ahead of the earlier schedule of August 15, 2015. But with the target within reach, the finance ministry is now looking at doubling the target to open 15 crore accounts, said an official.

While banks have been ahead of the curve in opening bank accounts, the run rate for deposit accumulation has started picking up now. At current levels, each Jan Dhan account has a balance of around Rs 750. Initially, the average balance in each account was around Rs 500.

Historically financial inclusion accounts have been low value accounts for public sector banks with balances of less than Rs 1,000. For banks, experts said, the challenge is to ensure that the accounts remain active and account holders keep depositing funds as low account balance have in the past deterred bankers from pushing financial inclusion.

This time, however, the government is hoping that cash transfer into the accounts will ensure that transactions take place and sufficient balance is maintained. With the finance ministry also proposing overdraft facility based on the financial history of an account holders, there is an added attraction to maintain a healthy balance.

A recent report by Boston Consulting Group, Ficci and the Indian Banks' Association had pointed out that among the 16 crore no-frills accounts opened before Jan Dhan's launch, only a quarter had a single transaction last year. Similarly, a quarter actually had a balance. "In effect, five years of effort has led to about 20% addition to active savings bank accounts in the nation," said the report, released in September.


Chandra Shekhar Ghosh, CMD of micro finance institution Bandhan Financial Services, which recently got RBI permission to set up a bank network, told TOI on Tuesday that the challenge for banks is to deliver services at the doorstep. "The Jan Dhan Yojana is a very good initiative to open the accounts but how banks design the products and services and bring it to the doorstep that is the issue. You need to inculcate the habit of banking with those customers," he said.

Three-fourths of Jan-Dhan accounts hold zero deposits

Even as banks race to open up accounts under the Pradhan Mantri Jan-Dhan Yojana, only a quarter of the accounts opened till date have any cash deposited in them.

Official data reveals that of the 6.99 crore bank accounts opened till November 4, 75 per cent or 5.29 crore accounts have zero balance. The data also reveals that it is two non-BJP states — Uttar Pradesh and West Bengal — where the maximum number of bank accounts have been opened under the scheme.

However, 1.69 crore accounts under the scheme have managed to bring in Rs 5,294.10 crore of household savings into the formal banking channels. Back of the envelope calculations show that on an average each of the accounts have deposited Rs 3,100.

Officials, however, argue that opening of bank accounts is more important and savings will pick up gradually. “A bank account will help inculcate the habit of saving,” said an official. The Jan-Dhan Yojana was launched by Prime Minister Narendra Modi on August 28 with the goal of eradicating “financial untouchability” of the poor by opening at least one bank account for every family in the country in less than six months.

At the time banks had been given a target of opening 7.5 crore accounts under the scheme. Each of the accounts come with a debit card, Rs 1 lakh accidental insurance policy and Rs 30,000 free medical insurance cover for those who enroll before January 26. Depending on the performance of the accounts in the first six months, banks will later extend a Rs 5,000 overdraft facility to one account per household.

While Samajwadi Party led-Uttar Pradesh has opened 1.16 crore bank accounts under the scheme, Trinamool Congress-governed West Bengal has opened 49.54 lakh bank accounts. BJP-led Rajasthan and Madhya Pradesh have opened 46.3 lakh and 45.82 lakh accounts, respectively, under the scheme till October 29, 2014. The finance ministry, which has been keeping an eye on the progress of the scheme is hopeful that it will meet the target for account opening this fiscal. The data reveals that of the 6.99 crore accounts opened, 3.69 crore RuPay debit cards have also been issued while 2.15 crore accounts have been seeded with Aadhaar numbers.

However, experts say that for the scheme to be truly successful, banks need to provide doorstep services. “Bankers need to understand that if they want to really do financial inclusion, accounts have to be active… they need to provide doorstep banking along with overdraft facility from day one so that the holder can easily access the services,” said Chetna Vijay Sinha, chairperson, Mann Deshi Bank Organisation that runs a regulated cooperative bank for women.

Sunday, October 19, 2014

Every BPL household to have RuPay card in 6 months

Speaking on the sidelines of the launch of RuPay card at GSC Bank on Tuesday, S K Gupta, chief project officer, RuPay, National Payments Corporation of India (NPCI) said that in six months, every household in the country below poverty line (BPL) will have a bank account and a RuPay card. More than 40 million RuPay cards have been issued in the country till now. "There are 2,000 licenced banks in the country. Earlier, only 50-55 banks could issue debit cards but now around 310 banks are issuing RuPay cards," said Gupta.

RuPay card which was launched 2.5 years back is fully Indian card payment network set up by NPCI. Along with a RuPay card, customer also gets an accidental insurance of Rs 1 lakh, the scheme will be valid till March 2015.

Under Pradhan Mantri Jan Dhan Yojana (PMJDY), three districts in Gujarat have achieved target of opening one bank account in each household. Porbandar, Mehsana and Gandhinagar have reported that at least one bank account of all households has been opened thereby making these areas fully saturated in PMJDY. There are 1.22 crore households in Gujarat, of which more than 95 lakh households have one or more bank accounts as of now. As on October 7, 2014, 5.52 crore accounts have been opened and a deposit of Rs 4268 crore have been mobilized under PMJDY so far.

Jan Dhan scheme goes against KYC norms, is time bomb for banks



Do not get me wrong. I believe financial inclusion is a wonderful initiative and everybody should have access to a bank account. The concern I have is how this should be done.

Shortly after the budget, on August 28, the Jan Dhan scheme was announced. Its purpose was to make opening a bank account attractive and thereby to coax individuals who do not have a bank account to open an account. As sops there were several inducements – the account could be opened with no deposit; accident insurance of Rs 1 lakh; life insurance cover of Rs 30,000; an overdraft facility of Rs 5,000 and a RuPay debit card to withdraw money.

Banks were asked to promote Jan Dhan, and in the first ten days a mind boggling 3 crore accounts were opened. By October 7, 5.52 crore accounts had been opened.

My concern stems from various factors.

The first is that the account can be opened with just two signed photographs. An individual does not have to submit PAN card or Aadhar card or any other documentation. My concern here is two-fold. This submits that no real verification of an individual is required and that goes against the purpose of the Know Your Customer (KYC) rules that were brought in to check money laundering and terrorist activities.

Earlier before these rules were enforced individuals opened accounts in fictitious names to "bank" their black money. The other worry is that individuals will have multiple accounts in different banks which they may then misuse for the benefits under the scheme. The one-page account opening form has a column seeking self-declaration that a person does not have any account in any bank. This self-declaration is meaningless as there is no mechanism to stop multiple accounts. Furthermore there is no inter-bank arrangement to stop duplication.

Bankers agree that accounts opened without a valid address proof are high risk. They are unable to do anything though in this regard as the scheme permits accounts to be opened with two signed photographs.

The Prime Minister after announcing the scheme wrote to the chairmen of all public sector banks to aggressively open accounts – the target given was 7 crore accounts. The large number of accounts opened is testimony to the enthusiasm displayed by these worthies. State Bank alone opened 11,300 camps solely to open Jan Dhan accounts. Others were not far behind. There have been 12-hour Saturday camps and account opening Sundays. The issue that needs to be addressed is whether banks can service these accounts. Service in some of the large public sector banks are often found wanting. The infrastructure does not exist to handle this volume. No one seems to have addressed the issue on banks expect to manage this.

In the initial years of bank nationalisation, public sector banks were given targets that had to be met. There were loan melas held and large amounts were disbursed. These ended up as bad loans as the recipients viewed these loans as a right. I remember a public sector banker who told me that he was told that he should disburse amounts to farmers for digging wells. In this endeavour he would meet villagers who had land and force them to take money to dig wells they did not ask for.

The aim was to meet the target. More often than not the money was spent for another purpose as no follow-up was done and in time they became bad debts. I foresee a situation that is similar. Many will run up an overdraft of Rs 5,000 and then disappear off the grid or open another Jan Dhan account at another bank and in time run up another overdraft. Public sector banks labouring with huge non-performing loans cannot afford to be saddled with another potential time bomb. I foresee too that even though bankers may say that all will not be permitted to run up an overdraft, there would be political pressure that will be brought to bear and bank managers may have no alternative.
I honestly hope these concerns do not become a reality but I am frightened. We, as a race, have a tendency to subvert even the best of intentions and financial inclusion is a good thing.

Thursday, October 9, 2014

5.29 crore accounts opened; 1.78 crore RuPay cards issued under PMJDY





"As on date, 5.29 crore accounts have been opened under PMJDY, of which 3.12 crore are in rural and 2.17 crore are in urban areas. RuPay Card have been issued in 1.78 crore accounts," an official statement said.

Prime Minister Narendra Modi had launched this ambitious scheme of financial inclusion on August 28.

The benefit of Pradhan Mantri Jan Dhan Yojana (PMJDY) can be extended to existing account holders without opening a new account.

The statement said Mission Director and Additional Mission Director reviewed the progress in implementation of PMJDY with Executive Directors of PSU banks and some of the private banks such as Axis Bank, HDFC Bank, ICICI Bank and IndusInd Bank.

It said banks have been advised to increase their capacity to issue RuPay cards and clear the backlog quickly.

While most of the banks expect backlog to be cleared by October 15th, in some banks it may take four weeks, it added.

Banks have initiated the survey work for identification of uncovered households which will be completed by October 10. This is excluding the states of Haryana and Maharashtra where
survey work has been temporarily suspended in view of Assembly Elections, the statement said.

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

Besides, account holders under the scheme will get life insurance cover of Rs 30,000. This is an additional benefit that was announced by the Prime Minister during the launch of the scheme.

The government is also considering transfer of kerosene oil and LPG subsidies directly to bank accounts.

Presently, the government subsidies the products so that consumers can buy fuel below market price, however, under direct benefit transfer the consumer will be paid cash subsidy so that he can buy kerosene and LPG at market price.

Jan Dhan target to be met, on paper

 20140924_122336

Enquiry about a Jan-Dhan account form at a Bank of Baroda branch in the National Capital Region (NCR) was greeted with: but don't you have an account in any bank? After 10 minutes, the form did eventually come, with a stare that had 'why burden us with another account that is going to remain idle' written all over it.

Just a few kilometres away, one of the branches of IDBI Bank had run out of forms. An executive explained that since there was a huge pile of forms yet to be processed, it had been decided to go slow in opening new accounts. A nearby United Bank of India branch is yet to issue RuPay cards to some customers who opened their accounts nearly a month ago. One such customer said: "Bank officials were clearly in no mood to open our accounts in the first place. We were asked to come some other time. When we persisted, they went through the motions. But we are yet to receive anything."

FAST TRACK INCLUSION
  • 47,630,652 - Number of new accounts opened
  • 13,303,975 - Number of RuPay cards issued
  • Rs 3,226.97 crore - Balance in accounts
  • 36,574,947 - Number of zero balance accounts
Status as on September 23 Source: Ministry of finance

As the Jan-Dhan scheme completes a month since its official launch, reports coming in from various parts of the country suggest the stated target of 75 million new accounts will be achieved much before January 26 next year. But the scheme's implementation is patchy. Agents are charging commissions for filling forms in Bihar. Reports indicate in Madhya Pradesh and Uttar Pradesh, stationery shops are selling forms as bank branches have run out. "These reports are not baseless. Some of these things are happening. But an overburdened banking system cannot be expected to do everything," said an executive with a leading public sector bank (PSBs).

In terms of numbers, the scheme has exceeded expectations. By September 23, all banks put together had opened 47 million new accounts. RuPay cards have been issued to 13 million people. Of all accounts opened in less than a month, 36 million are zero-balance ones.

Bankers this reporter spoke to complain they are flooded with inane queries. What are the benefits of this loan scheme? When will the insurance money come into the account? How much loan can be taken against this account? Can insurance money multiply with multiple accounts and can the RuPay card serve as another proof of identity? "With such a deluge of questions every day, two executives of a bank branch, on an average, are entrusted with the task of dealing with them," said another bank executive. It was bound to have some impact on core banking operations, he added.

The less-than-enthusiastic response of bankers stems from the fact that most branches have been asked to hold 12-hour camps every Saturday. At times, staff are made to come in on Sundays to ensure satisfactory completion of targets. "Even if we take the help of business correspondents, verification of documents and processing of forms have to be done by bank staff. There is a limit to how many forms can be processed in a day," said another executive with a PSB.

Bankers also say multiple accounts might prove a spoiler. "I will say 50-60 per cent of all the accounts that have been opened under the Jan-Dhan scheme are by those who already have accounts in other banks," said the executive of the leading bank. Other bankers concurred. In fact, this reporter came to know about a person who opened a new account under the scheme in the branch where she already had an account. "What is wrong in this? If there is a new scheme, why should we be denied its benefits just because we are already part of the banking network?" her husband, a resident of Ghaziabad, asked.

The one-page account opening form has a column seeking self-declaration that a person does not have any account in any bank. But bankers say the self-declaration is meaningless as there is no mechanism to stop multiple accounts. "If a person has multiple documents as proof of identity, he can open multiple accounts and our system cannot detect it. There is no inter-bank arrangement to stop duplication," said the branch manager of another PSB.

Bankers say accounts opened without valid address proof are put in the high-risk category and these are unlikely to get the overdraft facility. Such account holders will be asked to furnish proof of residence within a year, as is the case with all accounts in the high-risk category. The Bank of Baroda form mentions that eligibility for an overdraft facility of up to Rs 2,000 is "satisfactory operation" of an account for at least six months. "There is a great deal of misconception about the overdraft facility. Those who have opened accounts under this scheme are under the impression that they automatically become eligible for the overdraft facility, which is not the case," said the executive of the leading PSB.

On accident insurance of Rs 1 lakh for each account holder, bankers say it comes automatically with the RuPay card. What it means is that existing account holders who opened their accounts prior to the launch of the scheme may get RuPay cards issued against their old accounts and become eligible for accident insurance. However, bankers are awaiting further instructions on who is going to pay the premium for the life insurance cover of Rs 30,000 that has been promised with each Jan-Dhan account.

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.

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.

Monday, September 22, 2014

Govt yet to decide on who will foot the bill for Jan Dhan Yojana life cover

The Government is yet to firm up the modalities for life insurance cover of ₹30,000 announced by Prime Minister Narendra Modi on August 28 – the launch date of the Pradhan Mantri Jan Dhan Yojana (PMJDY). The Department of Financial Services (DFS) has forwarded a couple of proposals to Finance Minister Arun Jaitley who, as head of the PMJDY mission, is expected to take the final call, official sources said. The proposals under consideration include dipping into the social security fund managed by Life Insurance Corporation and setting up a joint fund by the LIC and the Government.

The basic question that remains unanswered is who will foot the insurance premium bill for the life cover to be provided to 7.5 crore unbanked families in the country.

Indications are that it will fall entirely on LIC, which had initially expressed reservations on bearing this burden. 

As of September 10, as many as three crore PMJDY accounts have been opened across the country — 1.9 crore in rural areas and 1.1 crore in urban areas.

However, the main area of concern is that RuPay cards have been issued to only 33 lakh account-holders, which is about 10 per cent of the accounts opened under PMJDY. 

As the RuPay card is the basis of all benefits attached to the PMJDY, the Finance Ministry has asked banks to sort out the issues that come in the way of speedier implementation of the programme.
These include personalisation of RuPay cards, devising proper distribution of RuPay cards and ensuring that industry be informed about projections for RuPay cards.

Wednesday, September 3, 2014

Outlets everywhere, not many to bank on

 Is the existing banking infrastructure ready to take on the Jan Dhan Yojana load?
 
One of Rajesh Singh's friends went from Delhi to Birpur, a small town in Bihar's Supaul district bordering Nepal, with few hundred rupees and an ICICI bank debit card in his pocket to attend a family function. Being accustomed to the reliability of automated teller machines (ATMs) to dispense cash at any hour, he never worried about the expenses he was to incur at the function the next day. However, upon arrival at the small town, he got the shock of his life when he was told that all the three ATMs in the town were out of order and were going to remain so for the next few days.

"My friend had to ask his acquaintances to lend him Rs 25,000. I could sense that he was not comfortable, more so because he was not in a position to pay the money back quickly," said Birpur resident Rajesh, recalling the events of the evening he spent with his friend running around to arrange the money which could easily have been withdrawn from any of the ATMs. "My experience is that all the ATMs in and around Birpur rarely work," Rajesh added. And in places where they do work, cash runs out within minutes. "ATMs are stuffed with cash once a day, sometime around 10 am. And there is a long queue outside to withdraw money. Within 30-40 minutes ATMs run dry," said Avinash, a resident of Triveniganj, another small town in Bihar, 40 km from Birpur.

The problem is set to grow following issuance of 75 million new RuPay cards in the next six months with the launch of the Jan Dhan Yojana. In addition to the problem of long queues at ATMs, there would be the problem of guiding new cardholders, especially in rural and semi-urban areas, on how to use those cards, some bankers told Business Standard. "Biometric cards, though costly in the beginning, are very simple to use. And they mitigate the risk of theft or fraud. RuPay cards will entail a lot of guiding from banking staff to new customers. That may result in hiring caretakers at ATMs who will help customers. Then there is the risk of pin-based cards being misused," said a middle-level banker with a leading public sector bank.

Biometric cards prevent duplication, which is not the case with the RuPay card at the moment. "There is competition among branches to open accounts. With the Reserve Bank of India mandating that a single proof of identity is enough to open an account, people with multiple identity cards are opening multiple accounts. And all new accounts are being opened under the Jan Dhan scheme, irrespective of income category of the people opening them," said a banker with a public sector bank working in Delhi. People opening accounts were expecting higher insurance cover and overdraft with multiple accounts, observed another public sector banker based in Sagar, Madhya Pradesh.

According to Reserve Bank of India data, the country had 17,844 ATMs in rural areas and 19,327 ATMs in semi-urban areas at the end of March 2013. Most of these areas are served by state-run banks. And many of them face disruptions due to failure in satellite linkages and poor broadband connectivity. Bankers in charge of running the ATM network say that while in urban centres, faulty machines can be rectified in eight hours, the resolution takes seven to eight working days in remote locations.

On ATMs running out of cash, officials say banks earmark an amount for a region, which is revised only during the festival season. The amount has remained the same despite the number of customers and the size of the ATM network growing, they add. The country had a network of 95,686 ATMs at the end of March 2012. The number increased to 160,055 by March 2014.

A creaky ATM network is not the only problem in towns and villages. The sense one gets after talking to bankers and customers in states like Bihar, Uttar Pradesh and Madhya Pradesh is that the branch network, especially of state-run banks, too needs a major infrastructure lift. "Our branch is running without an electricity connection for a year now. There is a limit to how much service we can offer without basic facilities like regular power supply," said a branch manager with a leading public sector bank posted at a place 100 km from Bhopal.

As a result, customers end up spending a lot of time on services like withdrawing or depositing money. "I operate a current account in the main branch of Punjab National Bank in Hapur. There is such a rush that I spend a minimum of two hours to withdraw or deposit money," said Ajay Tyagi of Hapur in Uttar Pradesh. Then there is the problem of frequent disruption in broadband connection stalling transaction in branches for hours. "My uncle had to sell a piece of land and execute a sale deed in the registrar's office. He was in a real hurry as he does not stay here but needed money urgently. Before executing a sale deed you need to deposit money for stamp duty and other charges in an authorised bank and get the receipt. My uncle nearly missed executing the sale deed as the banking operation was disrupted that day because of a link failure," said Shekhar Chaudhary, a resident of Ganpatganj, a small town in Bihar's Supaul district. And link failure is a recurrent problem in many branches in small towns and villages.

While the bank network expanded by 18,346 in financial years 2011, 2012 and 2013, the country saw an addition of 108 million basic savings accounts in that same period. "The growth can be easily managed if alternative channels of banking work efficiently. However, because of poor financial literacy and consequent apprehension about alternative channels, many people like to visit branches for basic transactions," said the middle-level banker.

CHALLENGES IN INCLUSIVE PUSH
  • Poor satellite linkages and broadband connectivity for automated teller machines
     
  • Uninterrupted power supply mostly unavailable to run the machines
     
  • ATMs in rural and semi-urban areas tend to run out of cash soon
     
  • Guiding new RuPay card users to use ATMs
     
  • Higher risk of misuse and frauds due to lack of knowledge about ATM use
     
  • 7-8 working days to repair faulty machines in remote locations, against 8 hours in urban areas
 

Tuesday, September 2, 2014

Banks open 2.14 crore accounts under Jan Dhan Yojana

The Finance Minister said that the target of opening up of 7.5 crore would be achieved before January 26, 2015. (Reuters)

Finance Minister Arun Jaitley today said banks have opened about 2.14 crore saving accounts since the launch of Jan Dhan Yojana on August 28.

"As of yesterday afternoon 1.84 crore accounts were added. Enrollment have continued...as of today afternoon about 2,14,34,000 accounts have been opened," he said.

The Finance Minister said that the target of opening up of 7.5 crore would be achieved before January 26, 2015.

The beneficiaries, who already have a bank account, are also eligible to take benefits of accident insurance of Rs 1 lakh and life insurance of Rs 30,000 under this scheme by getting a RuPay card issued from their bank branches before January 26, 2015.

Prime Minister Narendra Modi on August 28 launched the Pradhan Mantri Jan Dhan Yojna, a mega financial inclusion scheme, to cover about 7.5 crore unbanked households.

Under the scheme, a person from an unbanked household, opening an account will get a RuPay debit card with a Rs 1 lakh accident insurance cover. An additional Rs 30,000 life insurance cover will also be given if the accounts are opened till January 26, 2015.

Speaking about the scheme, Financial Services Secretary G S Sandhu said Rs 1 lakh accident insurance with the RuPay debit card is free to customer.

However, he said the premium on Rs 30,000 life insurance cover would be part paid by beneficiaries for which department is working out modalities.

The new scheme is an improvement over the UPA's financial inclusion programme.

The earlier scheme had no focus on households and no emphasis was given on urban financial inclusion, some experts said. Besides, they maintained that there was a cumbersome Know Your Customer formality, restricting account opening.

Other deficiencies cited included lack of credit disbursement and 47 per cent of business correspondents being untraceable, resulting in inactive accounts.

The new scheme has tried to address all the possible deficiencies and its monitoring would be done at state and district levels.

The 'mission mode' approach has been envisaged with the Finance Minister as head of the mission.
The mission will have five different levels for overseeing the implementation of the programme, three with the Centre and two with state governments.

The programme assumes importance as 42 per cent of the population is still out of the formal banking system, and has to depend on money lenders for meeting their credit needs.
The present banking network of the country comprises