AT-KABUL: Indian Prime Minister Narendra Modi announced his vision to launch the biggest financial inclusion initiative in the world under the rubric “Pradhan Mantri Jan Dhan Yojana (Prime Minister’s People Money Scheme)” and ensured that it was implemented within two weeks across the country. The objective of this scheme was to ensure access to various financial services like availability of basic savings bank account, access to need based credit, remittances facility, insurance and pension to the excluded sections i.e. weaker sections & low income groups. With a combination of traditional banking with effective use of technology the scheme envisaged universal access to banking facilities with at least one basic banking account for every household. This was aimed at increasing financial literacy, access to credit, and providing insurance and pension facilities to the poor and people who had remained outside the banking network. No deposit was required to open an account but the beneficiaries were to get a RuPay Debit card having an inbuilt accident insurance cover of र1 lakh (100,000 INR). To increase the schemes attractiveness Government also decided to channel all Government benefits (from Centre / State / Local Body) to the beneficiaries accounts and pushing the Direct Benefits Transfer (DBT) scheme of the Union Government.
The scheme is so popular that it created a Guinness World record for opening of most bank accounts (18,096,130) in one week from 23-29 August 2014. This popularity has continued and against an estimated target of 75 million new accounts from uncovered households by 16th January 2015, banks have opened 114 million new bank accounts. 60% of these new accounts are in rural areas while urban areas account for the balance 40%. Even more heartening is the fact that female account holders accounted for 51% of these new accounts. Debit cards have already been issued to 97.4 million individuals who are now covered by an accidental insurance of Rs. 1.00 Lac under this scheme. In addition there is a life insurance cover of Rs.30000 for eligible beneficiaries. Though the new accounts did not require any minimum deposit the account holders ended up depositing Rs. 9032 crore (close to USD 1.5 billion).
This scheme is a game changer for the Indian economy as it has provided a platform for Direct Benefits transfer which will help in plugging leakages in subsidies leading to substantial savings to the government.
Under the direct transfer of cooking gas (LPG) subsidy, an amount of Rs. 1757 crore has already been transferred to the beneficiaries since the banking network since mid-November. 19 other schemes across the country have been rolled out for direct transfer and State Governments have also been requested to transfer cash/benefits directly in the bank accounts of beneficiaries thereby cutting out layers from the delivery process.
Finally, to ensure universal access to banking facilities for all households across the country through a bank branch or a fixed point Business Correspondent (BC) called Bank Mitra (Bank Friends), 1.23 Lacs Bank Mitra have been set up in the country. Steps are being taken to ensure that the Bank Mitras are provided with device capable of on line interoperable transactions using Rupay cards and Aadhaar ( Unique Identity Card) enabled payment system. Use of Rupay cards at other access points will help in reduction in cash transactions and making them digital which will move the economy towards a less cash society.