Banks opened a record 15 million accounts on Thursday, against a target of 10 million, as Prime Minister Narendra Modi launched his government’s massive financial inclusion programme, the Pradhan Mantri Jan Dhan Yojana. The scheme aims to take banking facilities to 75 million households by January 26, 2015, against the earlier deadline of August 15, 2015.
For this, banks have to open another 60 million accounts in five months. To help lenders meet the target, the prime minister announced a life cover of Rs 30,000 for all those opening bank accounts by January 26. Under the scheme, each customer will also get a RuPay debit card, with an in-built accident insurance cover of Rs 1 lakh and an overdraft facility of Rs 5,000, subject to satisfactory operations of the account for at least six months.
“Never before had insurance companies issued 15 million accident insurance policies in a single day. Never before in economic history were 15 million bank accounts opened on a single day,” Modi said at the packed Vigyan Bhawan here.
Officials said the life cover would be free for the scheme’s beneficiaries. For the debit card, a fee of 50 paise will be charged per transaction. “The insurance cover is free for account holders,” said Vijayalakshmi Iyer, chairperson & managing director, Bank of India. She added the bank had received a good response at its camps, easily helping it exceed its target of 600,000 accounts on the first day. Asked whether lenders had concerns with regard to the administrative costs of such low-cost accounts, she said the government would reimburse banks.
Several Union ministers and 20 chief ministers simultaneously launched the scheme at 600 programmes and 77,852 camps across the country. While Information & Broadcasting Minister Prakash Javadekar attended such a programme in Pune, Law Minister Ravi Shankar Prasad did so in Chennai, External Affairs Minister Sushma Swaraj in Bhopal, Home Minister Rajnath Singh in Lucknow and Human Resource Development Minister Smriti Irani in Surat.
Minister of Statefor Finance Nirmala Sitharaman, whoon Tuesday cancelled her visit to Myanmar to attend this launch, played an active role in organising the event.
The prime minister also launched a mobile banking facility on basic phones; now, one can transfer funds and check the available balance using any handset, through the SMS platform.
In a country where 40 per cent of the population does not have access to banking services, Thursday’s programme would mark the beginning of the end of “financial untouchability” and rid the country of poverty, Modi said. He recalled the bank nationalisation of 1969, aimed at extending the reach of the financial system to the doorsteps of the poor. “But I regret to say after 68 years of Independence, not even 68 per cent of the population is covered by the banking system,” he said.
Under the Jan Dhan Yojana, all benefits from the Centre/states/local bodies are proposed to be transferred to the accounts of beneficiaries.
Also, the government will push the Direct Benefits Transfer (DBT) scheme and try to restart it for liquefied petroleum gas. It is likely the National Rural Employment Guarantee Scheme will be included under DBT.
For the entire exercise, the existing banking network will be strengthened – it will rope in an additional 50,000 business correspondents and set up about 7,000 branches and 20,000 new automated teller machines, in the first phase.
Modi said the success of the enrolment drive on Thursday would give confidence not just to officials of the Department of Financial Services and banking sectors but to officers across Union government departments.
Saying the financial inclusion programme would fetch bankers the blessings of millions of women across the country, the prime minister, in an extempore speech, struck an emotional chord with the audience. Pointing out the five women who received account-opening kits at Thursday’s event appeared to have been dressed for a festival, he described the occasion as “vish-chakra se gareebon ki aazaadi ka parv (a festival to celebrate the liberation of the poor from a poisonous cycle)”.