Showing posts with label prime minister modi. Show all posts
Showing posts with label prime minister modi. Show all posts

Sunday, February 26, 2017

PM Pitches for Digital India, Asks Citizens to Teach BHIM App to 125 Others

PM Pitches for Digital India, Asks Citizens to Teach BHIM App to 125 Others

Declaring digital payments will help fight corruption and proliferation of black money, Prime Minister Narendra Modi on Sunday said each citizen should teach 125 persons how to use the Bharat Interface for Money(BHIM) digital payment app.
"Remembering Babasaheb Ambedkar, you teach at least 125 persons about downloading the BHIM app," Modi said in his monthly 'Mann Ki Baat' radio broadcast.
To encourage digital payments after the November demonetisation of high-value currency notes, the government has recently launched the Bharat Interface for Money (BHIM) mobile app.
IT Minister Ravi Shankar Prasad said earlier this month that the BHIM app had already crossed 140 lakh registrations.
"Lucky Grahak Yojana will complete 100 days on April 14, the birth anniversary of Babasaheb Ambedkar," the Prime Minister said.
Following the ban on Rs 1,000 and Rs 500 currency notes, the government launched the Lucky Grahak Yojna (LGY) for consumers and Digi-Dhan Vyapar Yojana (DVY) for merchants to incentivise them and promote digital payments. The schemes will remain open until April 14.
There are 15,000 daily winners qualifying for total prize money of Rs 1.5 crore, as per the schemes. In addition to this, there are over 14,000 weekly winners qualifying for total prize money of over Rs 8.3 crore every week.
Customers and merchants who use RuPay Card, BHIM/UPI, USSD based *99# service and Aadhaar Enabled Payment Service are eligible for wining daily and weekly lucky draw prizes.
The government has given away over Rs 153.5 crore reward money to nearly 10 lakh citizens under these schemes, NITI Aayog CEO Amitabh Kant said earlier this week.
"It is a delight to learn that till now, under the Digi-Dhan Yojana, 10 lakh people have been rewarded, over 50,000 traders have won prizes and an amount of almost over a 150 crore rupees has been earned as prize money by people who have promoted and carried forward this great campaign," Modi said.

Friday, December 30, 2016

PM Narendra Modi's Mastery Of The Message To Be Tested As India Enters 2017

PM Narendra Modi's Mastery Of The Message To Be Tested As India Enters 2017: Foreign Media

Prime Minister Narendra Modi will go into 2017 watchful but unbowed.

In what will be a busy year of state elections, economists are slashing India's growth forecasts because Prime Minister Narendra Modi's unprecedented cash clampdown is denting demand. The experiment has missed its first marker of success and the almost-daily regulatory flip flops are enraging citizens.

Yet, analysts point to the fact that India hasn't seen bloody riots of the kind witnessed in Venezuela, which followed PM Modi in banning higher-value banknotes before it reversed the move. Perhaps most importantly, a fractured opposition hasn't been able to capitalize on the social pain triggered by the world's most sweeping currency policy change in decades.

"So far there has been no successful mobilization of public opinion against demonetization," said Sanjaya Baru, New Delhi-based director at the International Institute of Strategic Studies and media adviser to Narendra Modi's predecessor, who's written books analyzing former administrations. "Though we can't say what's going to happen in the future, at least so far it would seem like Modi is on top."

The move tests PM Modi's reputation as the master of the message. He has touted the cash ban as India's strongest step against tax evasion and graft in a nation where rising economic inequality helped him sweep to power with the biggest electoral mandate in 30 years.

PM Narendra Modi on Nov. 8 banned 500 and 1,000 rupee notes, removing 86 percent of currency in circulation. With TVs beaming pictures of serpentine queues spilling out of banks and newspapers carrying stories of rural distress, he pleaded with Indians to give him until Dec. 30 to ease the strife.

Here's the impact: India's economy is projected to grow 6.5 percent October-December instead of the 7.8 percent economists had predicted earlier. Moody's Investors Service says asset quality at Indian banks -- reeling under a pile of bad loans -- will weaken. Small businesses, the biggest creators of jobs, are estimated to forfeit transactions worth $9 billion.

International observers such as former U.S. Treasury Secretary Lawrence Summers and former World Bank Chief Economist Kaushik Basu have criticized Modi's move.

"Even if consumption revives quickly on the back of remonetization, investment could remain muted for longer," said Pranjul Bhandari, Mumbai-based economist at HSBC Holdings Plc. "The output gap, that is the slack in the economy, will likely remain negative for two quarters longer than we had initially estimated, making it unattractive for investors."

Medium as Message

And while the potential impact on state polls due in 2017 is not yet clear, the subdued outlook hasn't dented the performance of Narendra Modi's party in municipal elections over the past month.

One reason could be his ability to channel his message via social media, as President-elect Donald Trump does, allowing Narendra Modi to speak directly to the public without any media filter.

"This shows the importance people attach to good governance," PM Modi tweeted on Dec. 20 of the election results.

He, however, hasn't held a single national press conference since taking office and interviews are vetted. Instead, Narendra Modi relies on public speeches and has used the medium more than 10 times since Nov. 8 to defend demonetization.

Narendra Modi's speeches brim with rhetorical flourish and his bold cash clampdown became important part of his narrative as he approached the half way mark in his term early November.

"Modi presented himself as someone with fire in the belly, willing to change things in the country," said Ullekh NP, author of War Room: The People, Tactics and Technology Behind Narendra Modi's 2014 Win. "People at least for now believe his message; that he's incorruptible, that he has no family, that he's focused on the nation. But unlike an election campaign, where promises suffice, here there's prolonged hardship for people."

Support for Narendra Modi will waver if opposition parties form alliances in Uttar Pradesh, Ullekh said by phone from the key electoral state.

Shifting Goalposts

Narendra Modi's skill in rebranding has allowed him to recast his message even as massive deposits of old notes being turned in at banks robbed him of his main reason for the demonetization.

Indians have deposited 13 trillion rupees of the 15.4 trillion rupees invalidated by Narendra Modi's move, undermining the government's estimate that about 5 trillion rupees of this was unaccounted money and wouldn't reach banks.

"It seems very likely that the original aim of the demonetization drive -- forcing illicit wealth holders to come to light -- has already very nearly failed," said Vaninder Singh, an analyst at NatWest Markets, adding that this has pushed the government to change its commentary to fostering a cashless economy. "At what level of economic pain will we see an inflection in Modi's ratings? The answer depends upon how 'patriotic sacrifice' interacts with economic pain."

Political rivals allege that the shifting goalposts indicate Narendra Modi's Nov. 8 decision was never intended to target black money. Leaders from the main opposition Indian National Congress party said they'll have to hold smaller rallies in Uttar Pradesh due to the cash clampdown. The state's Chief Minister Akhilesh Yadav, from the Samajwadi Party, said he's sure to win because the lines of harassed citizens queuing up at cash machines will now shift to vote for him at polling booths.

Faith and Fear

Uttar Pradesh is due to vote by mid-May. It is India's most populous state and the biggest contributor to farm output. Elections will be held before that in four other states, including Punjab, called the 'bread basket of India.'

"Farmers are hurting," said Ajay Vir Jakhar, chairman of lobby group Farmers' Forum and grandson, son, and brother of Congress politicians. "Demonetization will have limited impact politically because opposition isn't able to take advantage of the pain."

Investors will focus on the government's first growth forecast for the year through March -- due Jan. 7 -- to assess the economic impact. Meanwhile, tax officials are raiding homes and offices across the country in a China-style crackdown on corruption, seizing bundles of currency notes and stashes of gold and jewelry.

Narendra Modi should follow his cash ban by lowering corporate and income tax rates in the budget -- likely Feb. 1 -- to encourage compliance, said analysts at Kotak Institutional Equities Ltd., adding that critics of his Nov. 8 decision are underestimating the "psychological" impact of the step.

The move "will reinforce the faith of the general population in the government's efforts to clean up the system and instill fear in a section of the society, which hitherto has had little regard for the laws of the land," they wrote in a Dec. 19 report. "Faith and fear."

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.

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

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.

Wednesday, September 3, 2014

Jan Dhan Yojana: Clarity awaited on insurance

So far, more than 25 million bank accounts have been opened under the Jan Dhan Yojana and all these individuals will be eligible for life covers of Rs 30,000 by LIC

 It might take time to offer life and accident insurance covers under the Pradhan Mantri Jan Dhan Yojana to those opening bank accounts under the scheme, as various issues in this regard are yet to be resolved.

Under the scheme, which seeks to open 75 million accounts by January 26, 2015, an accident insurance cover of Rs 1 lakh is provided with every RuPay debit card offered by the National Payments Corporation of India (NPCI).

NPCI officials said HDFC Ergo General Insurance would provide the accident cover under the scheme. This will cover accidental deaths, provided the debit card is swiped within 45 days of its issuance and is in an active state.

HDFC Ergo did not respond to a mail seeking details of the cover.

There is also a proposal for an additional accident cover of Rs 1 lakh for opening bank accounts within a stipulated period. While general insurance executives said state-owned general insurers would provide this, no official announcement or communication has been sent by the finance ministry to the companies concerned.

“Though this proposal was discussed in meetings with the finance ministry, it hasn’t issued any letter on when it would be launched and whether it would be completely free for customers,” said a senior insurance executive.

Sources said the general insurers selected for these covers were yet to receive any official communication from the ministry saying they had been selected for this and would have to make payments during receipt of claims.

While debit cards and insurance covers (at least a Rs 1-lakh accident cover) will be provided to all accountholders under this scheme, insurance officials say this might not be done immediately. An official said as the volumes were huge, they would be provided the complete kit within the next few weeks.

Further, the life insurance cover of Rs 30,000 is still being worked out, in terms of the premium collection, amount and the mode of payment.

Life Insurance Corporation of India (LIC), which will offer the cover to all individuals who open bank accounts under the financial inclusion scheme by January 26, 2015, has held a series of meetings with finance ministry officials on the collection of premia and administration of the scheme. A decision on the premium amount and the mechanism to pay claims is still awaited; a clarification is expected in the next three days.

So far, more than 25 million bank accounts have been opened under the Jan Dhan Yojana and all these individuals will be eligible for life covers of Rs 30,000 by LIC.

There have been talks of a minimal payment for this scheme by individuals. Also, the claim settlements could be through the Aam Aadmi Bima Yojana (AAMY), a social security scheme administered by LIC.

A life insurance cover wasn’t part of the Jan Dhan Yojana announced in Prime Minister Narendra Modi’s Independence Day address; it was announced on August 28, when the scheme was officially launched.

The scheme is expected to boost insurance penetration in India. Insurance penetration (premia, as percentage of gross domestic product, fell to 3.9 per cent in 2013-14, compared with four per cent in 2012-13, according to a Swiss Re sigma study). On the life insurance front, insurance penetration in India was 3.1 per cent; for non-life insurance, it was 0.8 per cent.

Monday, September 1, 2014

PM Modi wants to take RuPay cards to global level



Aiming to take 'RuPay' cards to the international level, Prime Minister Narendra Modi today said the success of financial inclusion scheme Jan Dhan Yojana will pave way for its global acceptance.

Under the Jan Dhan scheme launched today, banks will provide every account holder a 'RuPay' debit card with inbuilt Rs 1 lakh accident insurance.

 "... We are all aware globally about the popular Visa Card. Should we not also aspire that our 'RuPay' card becomes acceptable all over the world? Should it not also have the same credibility? After today's event, it looks like there is full possibility," Modi said after inaugurating the scheme.

The RuPay platform — developed by National Payments Corporation of India (NPCI)— is already being used by certain banks like ICICI, State Bank of India, Punjab National Bank, among others, for clearings and settlements.

RuPay, which works on three channels — ATMs, Point of Sales (POS) and online sales, is the seventh such payment gateway in the world.

With crores of poor people getting access to 'RuPay' debit cards, the divide between the rich and the poor will be bridged, he said, adding "like the rich people uses the debit card, now the poor too will have debit card."

Thursday, August 28, 2014

PM launches Jan Dhan Yojna, 1.5 crore bank accounts opened on Day 1




Prime Minister Narendra Modi on Thursday launched his government's mega scheme 'Jan Dhan Yojana', declaring that it was aimed at eradicating financial untouchability by providing bank accounts to the poor.

On the inaugural day, a record 1.5 crore bank accounts were opened across the country, the largest such exercise on a single day possibly anywhere in the world.

Unveiling the scheme within 100 days of forming the new government, Modi said, it will cover 7.5 crore people by January 26, 2015, who will be provided zero-balance bank account with RuPay debit card, life insurance cover of Rs 30,000 in addition to accidental insurance cover of Rs 1 lakh.

Later the account holders will be provided an overdraft facility of up to Rs 5,000.

"If Mahatma Gandhi worked to remove social untouchability, if we want to get rid of poverty, then we have to first get rid of financial untouchability. We have to connect every person with the financial system. And for that this programme has been given impetus," he said, adding, "when a bank account is opened, it's a step towards joining economic mainstream."

Prime Minister Narendra Modi felicitating a beneficiary couple at the launch of the Pradhan Mantri Jan Dhan Yojana in New Delhi on Thursday. (PTI photo)
Modi recalled the bank nationalization of 1969 with the avowed objective of spreading the reach of financial system to the doorsteps of poor. "But I regret to say that after 68 years of independence, not even 68 per cent of population is covered by the banking system," he said.

The scheme was simultaneously launched at multiple places by 20 chief ministers, several Union ministers, including information minister Prakash Javadekar at Pune, law minister Ravi Shankar Prasad at Chennai, external affairs minister Sushma Swaraj at Bhopal, home minister Rajnath Singh at Lucknow and HRD minister Smriti Irani at Surat.

There were in all 600 programmes and 77,852 camps on the opening day to open bank accounts.
Modi said history has been created in the banking system with opening of over 1.5 crore account in a day. Besides, a record has been created by providing 1.5 crore accidental insurance covers of Rs 1 lakh.

The Prime Minister described the occasion as a festival to celebrate the liberation of the poor from a poisonous cycle ("Vish-chakra se gareebon ki aazaadi ka parv").

"Banks have assured me they will do this work before January 26. Those who open accounts by January 26, 2015 over and above the the Rs 1 lakh accident, they will be given life insurance cover of Rs 30,000. This will help the poor family," he said.

In the third phase, he said, these account holders would also be provided micro-pension facility.

"I believe when a person opens a bank account then he or she takes the first step to get connected with the economic system. Today the 1.5 crore family who got connected with the economic system this will give a boost to the economy," he said.

Going forward, he can avail Rs 5,000 loan from the bank, the Prime Minister said, adding, this facility would be available after six months of opening of the bank account.

Expressing satisfaction at a number of records being broken today, the Prime Minister said the nationwide success of the enrollment drive today would give confidence not just to the officials of the department of financial services and banking sectors, but also to officers across the Union government, that they can successfully achieve the goals that they set for themselves.

"Never before would insurance companies have issued 1.5 lakh accident insurance policies in a single day. Never before in economic history would 1.5 lakh bank accounts have been opened in a single day.

"Never before has the government of India organized a programme of such scale — over 77,000 locations — with the participation of so many chief ministers, Union ministers, government and bank officials," the Prime Minister said.

Friday, August 8, 2014

Will PM Narendra Modi's financial inclusion plan use Aadhaar for authentication?

In less than two weeks, PM Narendra Modi is expected to announce a new Financial Inclusion drive.
However, even as the anointed day - the 15th of August - draws near, key aspects of this drive are still unclear.

 

The programme, called Sampoorn Vittiyea Samaveshan (SVS), seeks to add 20 crore new bank accounts. These will be linked to Aadhaar. They will probably provide an overdraft facility. And they will be used for cash transfers.

Go deeper into the details, however, and you encounter a set of unresolved questions. Prime among them, the role of Aadhaar.

While researching this story, ET reviewed two drafts produced by the Department of Financial Services - one in June, and the second in July. The draft dated 8 July, 2014, says: "This account would be linked with the Aadhaar number of the account holder and would become the single point for receipt of Direct Benefit Transfers (DBT) from Government/Local Bodies."

According to a source close to the UIDAI, who spoke to ET on the condition of anonymity, this phrasing suggests that while Aadhaar numbers might be seeded into bank accounts, it might not be used for authentication.

In other words, once the cash flows into the Aadhaar-linked bank account, last-mile authentication when the money is being withdrawn will be done using the authentication systems of either the relevant bank or the last-mile service provider - like a Banking Correspondent (BC) company.
Not using Aadhaar for last mile authentication has significant fallouts for the UIDAI. Which, among other things, has the Aadhaar-enabled Payment System as one of its key components, and sees authentication services as one of its principal functions and revenue streams.

Till now, the UIDAI has argued that Aadhaar-based authentication is needed to show that the DBT (Direct Benefit Transfer) has indeed reached the targeted beneficiary.

However, from the field, this claim has been marred by persistent reports that online biometric authentication is not working for manual labourers and the old. Agrees Sanjay Kuberkar, The founder of Adrenaline Financial Inclusion Advisors, "The biometrics do not always work."

Another reason the UIDAI wants Aadhaar-enabled authentication is because that will further inter-operatability. A person can use her biometrics to access her account through any BC, any bank.
Says the source close to the UIDAI, "If banks or last-mile providers use their own proprietary (biometric) authentication technologies, then there will be no inter-operatability." In other words, a person with an account in United Bank may not be able to use a BC working with State Bank of India to access his account.

This is where the debate gets complex. Aadhaar has defined standards for Micro ATMs and Biometric Capture. Banks and BCs adhering to those standards, with BCs who have plugged into the bank's core banking servers, can send authentication queries all the way to the UIDAI's central ID repository. In this design, a beneficiary can access her account through any service provider if they are Aadhaar-compliant.

But, banks too have been creating their own biometric databases. And the question is whether authentication requests where one bank sends one biometric authentication query to another bank can be as interoperable as the Aadhaar ones.

Under former DFS Secretary DK Mittal, the department ran such pilots in Haryana. These too were online biometric authentications but the biometrics were stored with the banks. But those, says the UIDAI source, failed.

However, another way to ensure interoperatability is to use PIN numbers instead of biometrics. It is here that a proposal in the SVS documents is interesting. It proposes that all account holders be provided with a RuPay card. Says Kuberkar, "The card works at any ATM, and does not require biometric authentication."

Counters the UIDAI source, "Biometrics are safer than PIN numbers.

In contrast, PIN numbers can be used also by those who have trouble with biometrics.
There is another reason why some banks want to retain authentication with them. Aadhaar was planning to start charging for authentication. A decision which has now been deferred to December.
Says Kuberkar: "Cost of Aadhaar authentication is an issue, even if the cost is kept at just 25 paise per authentication. There is at least one client bank of mine who is considering to use their own biometric authentication method instead of Aadhaar because of the cost implications."

What does this seeding/authentication debate mean for reducing leakages? According to MS Sriram, visiting faculty at IIM Bangalore's Centre for Public Policy, it is a good idea to use the Aadhaar number only for seeding. "Linking bank accounts with the Aadhaar number will help the government eliminate ghosts and duplicates from beneficiary lists."

Such a move, he says, also addresses the concerns around biometrics not working and privacy. "Using Aadhaar only for seeding also takes care of some privacy-related questions. A trail of a person's movements will not be available any longer at the central server."

About ten days ago, the Department of Financial Services (DFS) was expected to present an updated iteration of SVS to the Prime Minister. This was shortly after he reposed his faith in the UIDAI project. It is yet unclear what transpired in that meeting. The documents in the public domain pre-date that meeting. Emails to DFS officials seeking an appointment went unanswered.

However, based on conversations with UIDAI officials and Banking Correspondent (BC) companies, it seems there is little clarity on this question on how Aadhaar will be used.

Modi’s Financial Inclusion Plan - Rupay Card News

Who pays Who benefits?


One of prime minister Narendra Modi’s ambitious plans is the massive financial inclusion drive which envisages a bank account for 150 million Indians by August 2018. The idea of financial inclusion is not new—it has been the buzzword at the Reserve Bank of India (RBI) since 2005, but without much success. In fact, several thousand new bank accounts, opened under pressure from RBI, remained dormant or did not have a single transaction. Why will it be different this time? Well, Mr Modi reportedly proposes an overdraft facility of Rs5,000 for each account, besides a RuPay debit card with inbuilt accident insurance cover of Rs1 lakh. The overdraft will be backstopped by a Credit Guarantee Fund.

Had something like this been announced by the Congress government, it would have been immediately dubbed a loan mela or another subsidy scheme. But Mr Modi’s spectacular election campaign and the 12-year Gujarat development record have ensured that doubts and misgivings remain muted.

Financial inclusion and empowering the poor is a necessity. There is no doubt at all that the poor are forced to borrow at significantly higher rates, are badly exploited by moneylenders and also forced to pay more for all goods and services. When financial inclusion was attempted though micro-finance, it led to exploitation by rapacious micro financiers, insurers and others.

Will Modi sarkar succeed in getting the same government officials to deliver where others have failed? Will moneylenders not exploit the Rs5,000 overdraft facility for repayment of old borrowings? What will the Modi government do to prevent poor, unbanked, rural folk from blowing up the overdraft, as they usually do, on marriages and religious ceremonies and on liquor?

It is significant that KR Kamath, chairman of the Indian Banks Association, while talking about how bankers were working overtime on this project said, “More than being commercially viable, it is important to link every household with the banking system.” But what happens when the overdraft has been spent and there is a default in the books of our nationalised banks? It will not only be a cost to the exchequer, but all the householders, who were recently included, will be excluded from the system again. We will watch for answers, when the prime minister unveils his grand plan for financial inclusion from the Red Fort on Independence Day.

The second phase of the financial inclusion plan talks about a pension scheme for the lower income and unorganised sector and micro-insurance through the nationalised insurance companies. Premium for insurance products will come from schemes like the Rashtriya Swasthya Bima Yogana.

A catchy name, terrific tag line, nice logo and a marketing blitzkrieg is all very well, but we would much rather hear a discussion on how the Modi government has studied and fixed all the leakages and malpractices that prevented government-directed financial inclusion and insurance schemes from working.

Instead, all we are hearing from officials and bureaucrats, desperate to please a powerful prime minister, is about the spending and hiring spree (20,000 ATMs, 50,000 banking correspondents and 7,000 branches) planned to meet the ambitious targets.

Wednesday, July 23, 2014

PM Modi set to revamp financial inclusion; new scheme to be unveiled on August 15

PM Modi set to revamp financial inclusion; new scheme to be unveiled on August 15




Prime Minister Narendra Modi is set to give a big boost to the ongoing financial inclusion drive by unveiling a comprehensive programme at the Red Fort in his address to the nation on the Independence Day.

The proposed comprehensive financial inclusion programme envisaging insurance and pension cover, apart from a default cover for lenders, is likely to envisage opening 15 crore more bank accounts, 12 crore of which will be in rural areas over next four years, according to a note sent to the Indian Banks Association (IBA) by Financial Services Secretary G S Sandhu.

According to the note, Mr Modi’s new comprehensive financial inclusion programme has three major shifts from the one pursued by the previous government.

First, the earlier efforts at financial inclusion had villages as the unit for coverage while the current plan focuses on coverage of households.

Secondly, only rural areas have been the focus so far while both rural and urban areas have been included now, says the ministry note.

Thirdly, the current plan is proposed to be implemented as a ‘mission mode’ project. It envisages a comprehensive coverage of all excluded households by a six-pillar approach in two phases, according to the note.

The first phase of the programme, which begins from August 15 this year and ends on August 14, 2015, will provide basic banking accounts with overdraft facility of Rs. 5,000 and RuPay debit card with inbuilt accident insurance cover of Rs. 1 lakh and creation of credit guarantee fund for coverage of defaults in overdraft accounts, according to the ministry.

The second phase, which will begin on August 13, 2015 and conclude by August 14, 2018, will cover micro-insurance and unorganised sector pension schemes like Swavlamban.

When contacted, IBA said already state-owned banks, insurers and regulators are working overtime to ensure a smooth kick-start.

“We are currently busy chalking out the modalities of implementation of the project, which will be implemented in the entire country after it is declared by the Prime Minister on August 15,” IBA chairman K R Kamath, who is also the chairman of Punjab National Bank, told PTI.

It is a good scheme as it envisages going beyond the geographical boundaries and promises of connecting each and every household, he said, adding that more than being commercially viable, it is important to link every household with the banking system.

“Through this programme, we are looking at providing two savings bank account facility-one each for the husband and the wife-to all those households which not served by the banking system so far,” MR Kamath said.

“Of course, these basic banking accounts will come with some in-built overdraft facility and RuPay debit cards with an inbuilt accident cover of Rs. 1 lakh. We are awaiting the final announcement of the scheme by the Prime Minister.”

Inclusive pension is also one of the pillars of the proposed comprehensive financial inclusion programme.

“Pension under ‘the mission mode’ will lay emphasis on this facility for the lower income segment and the unorganized workers,” said R V Verma, acting chairman of the Pension Fund Regulatory and Development Authority (PFRDA).

“We will seek to achieve and expand the scope of the National Pension Scheme (NPS) to serve the disadvantaged sections of the population through active involvement and participation of all categories of intermediary institutions like banks, NBFCs, MFIs, NGOs, corporates and annuity service providers,” Mr Verma added.

Though micro-insurance will come in the second phase of the programme, insurers have already started working on it.

“While the already existing 4,000 micro offices of the four PSU general insurers would be strengthened, over 2 lakh existing business correspondents will be asked to sell micro insurance products to ensure the last mile connectivity,” New India Assurance chairman and managing director G Srinivasan said.

“Though micro-insurance will come in the second phase only, we have already started working on it,” he added.

The premium for the low-cost insurance products, which is to be paid by the beneficiaries or from subsidy under the Rashtriya Swasthya Bima Yojana scheme, will range between Rs. 100 and Rs. 300 per annum, New India Assurance general manager K Sanath Kumar said.

Nabard will provide the initial Rs. 1,000 crore to create a credit guarantee fund to cover possible defaults on overdraft accounts under the scheme, a Nabard official said.

Several rounds of meetings have already been held by the Department of Financial Services with all the stakeholders of the programme, including state-owned banks, insurance companies and pension regulator PFRDA.

The banking sector would be expanding itself to hire an additional 50,000 business correspondents (BCs), launch over 7,000 branches and more than 20,000 new ATMs in the first phase, Sandhu told the IBA, adding that around 50,000 BCs are likely to be appointed in rural areas for the programme alone.