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Will Jan Dhan Yojana be a gamechanger? Experts discuss

India may have got independence 67 years ago. But even after so many years, for over 10 crore households, financial freedom is still a far cry. In his maiden Independence Day speech, Prime Minister Narendra Modi unveiled the biggest financial inclusion programme of the new government Jan Dhan Yojana. He promised to give banking access to nearly 7.5 crore households in the country.

This includes one bank account per household, a RuPay debit card, a built in accident insurance cover of Rs one lakh and after six months an overdraft of Rs 5,000 each. And all this is to be achieved by January 26, 2015. As an incentive to the unbanked, the Prime Minster also promised an additional life insurance cover of Rs 30,000 to customers who open accounts before January 26th. But Jan Dhan Yojana set off on a flying start on the first day of its launch itself with nearly 1.5 crore bank accounts being opened by banks.

Also Read: Critics attack ‘wasteful, ineffective’ PM Jan Dhan Yojana

Prime Minister Narendra Modi is hoping that with the help of bank, telecom companies and business correspondents, he will be able to make a tryst with a new destiny.

In an interview with CNBC-TV18’s Latha Venkatesh, CV Rajendran,  Andhra Bank chairman, as former Bank of Maharashtra chairman, he previously went the distance to open accounts for the unbanked. M Balachandran, Chariman, National Payments Corporation (NPCI) – the organization which will run the RuPay card and who will pay for the insurance and Sanjay Jaju, IT secretary of Andhra state, who will ensure that most first time bank accounts get used to make government payments to citizens, discuss their views on the Jan Dhan Yojana.

Below is the verbatim transcript of the interview

Latha: Just explain the mechanics to us, where does the NPCI come in, what is the use of the RuPay card and how will you find the money to provide this insurance without any premium being paid by either the government or the bank?

Balachandran: It is much more than RuPay card. We would say that the entire Yojana, the fulcrum is going to be NPCIs various products and services. Like right at the beginning of opening an account, the KYC is going to be enabled by e-KYC service to be provided by NPCI which in turn is linked to people who have been provided with Aadhaar number. With that the banks will find it easy to open an account wherever Aadhaar number is already available to them. Then having opened an account the transactions are going to be enabled.

First of all, the difference between the earlier version of financial inclusion and the current one is that accounts are going to be active by adequate float funds in that – in the sense that the accounts are going to be having credits. If it is going to be government credit like various benefit schemes, the direct benefit transfer is going to be enabled by NPCI’s national automatic clearing house. Or if it is linked to the Aadhaar number, we are going to have Aadhaar enabled Payment Bridge.

Once the amount gets into that, thereafter it has to be made available to the individuals and that is going to be possible through RuPay debit card. It could be used at the ATMs both regular and micro ATMs as well as at the merchant sites for purchase of goods and services. Or somebody is agile enough it can be used for e-payments. Thereafter if money has to be sent from one account to another account, person to person or person to merchant that is going to be enabled by our instant money payment service (IMPS).

Latha: At the moment how many outlets do you have outside the cities, outside tier I to tier VI cities how many outlets do you have where RuPay is valid?

Balachandran: The RuPay is going to be issued by all banks which are participating. About 324 banks have already been enlisted for issuance of RuPay card that is besides the public sector banks, private banks, RRBs, cooperatives, urban banks and their subsidiaries. Already about 24 million cards have been issued. Now it is going to be part of the yojana and the numbers are going to proliferate. Then the ATMs, there are around 1,80,000 ATMs all across the country.

Latha: But how many are in villages, how many are in non-urban centres?

Balachandran: Many of them, I won’t say majority of them, but wherever the banks have established the ATMs this is going to be used. In addition to that to make it more accessible to the public the micro ATMs are going to be utilised and that is where the role of business correspondence will come. Even where there is no ATM, the mobile payment service is going to enable the entire transaction possible so that is how it has been planned for.

Latha: Just tell me whether the banking system is geared to open 7.5 crore accounts? We heard that in the first one crore accounts which were opened in a hurry before July 29, quite a few of them were people who already had accounts because simply the deadline had to be reached. Is the system geared to give 7.5 crore accounts in the first place?

Rajendran: Going by the performance during the last 26 to 28 where number of accounts banks have opened, I don’t find any major challenge in opening the 7.5 crore accounts before January 26. Most of our resources were deployed during this period in this job; we will continue to deploy more resources into this job.

Latha: The more meaningful problem is whether you will be able to get them to use the accounts? Do you have the business correspondent link in all the villages?

Rajendran: All our villages we have our business correspondent. There are only 160 villages where I am not able to put in for example 2200 villages we have business correspondent up and functioning. Only in 160 villages there are connectivity related issues where I am not able to provide the business correspondent, we are addressing this issue. Once the connectivity is established the businesses correspondent will become functional in these villages also.


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