Financial Untouchability Ends

New Delhi :  Within 13 days of making the announcement from the ramparts of Red Fort, Prime Minister Narendra Modi has ushered in a quantum leap in terms of financial inclusion of the unbanked households.

In a single day 1.5 crore free bank accounts were opened under the Pradhan Mantri Jan Dhan Yojana, with events being held at 77,000 locations across the country.

Under PMJDY, a beneficiary does not get merely a bank account, but other benefits, including an RuPay debit card, Rs 1 lakh accident insurance cover, and an additional Rs. 30,000 life insurance cover for those opening bank accounts before January 26, 2015.

The account performance would be monitored and an overdraft facility extended

At the main event, which was held in the national Capital at the Vigyan Bhawan, Modi outlined the contours of this landmark achievement. “Never before did insurance companies issue 1.5 crore accident insurance policies in a single day. Never before in economic history would 1.5 crore 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,” he said, adding that the success is an inspiration for achieving new heights.

Soon after making the announcement that all unbank-ed people would be covered under the Pradhan Mantri Jan Dhan Yojana, the prime minister also sent out 7.25 lakh emails to officials in PSU banks, outlining their targets. The enormity of the achievement has to be measured in the context of the fact that in the entire year 2013-14, 6 crore bank account were opened, and the total number of accounts is 24.3 crores.

When Modi had made the announcement, the target date for completing the programme with 7.5 crore accounts had been fixed for August 15, 2015, but now it has been advanced to January 26, 2015.

Reflecting on the banking scene, Modi said that said when banks were nationalized in 1969 it was done with the objective of bringing people into the economic mainstream. “But that objective had not been achieved till date. After 68 years of independence, not even 68% of India’s population had access to banking, “he said, while adding that it was easy for the rich to get a loan at low interest rates whereas the poor are forced to seek loans from money-lenders at five times the rate charged from the rich.

According to the critics of the scheme, there are questions as to why the private sector banks have been left out and the whole burden of spreading financial inclusion has been imposed on State-run banks. After all, if the public sector branches in the country are 75,000 the private sector branches are also an impressive 16,000 with many of these in semi-urban and rural areas.

BIG DAY FOR FINANCIAL INCLUSION

  • 1.5 crore accounts opened on first day
  • 7.5 crore people will be covered by January 25, 2015
  • Account holders will get a debit card.
  • Those who open accounts by January 26 will get life
  • insurance cover of Rs. 30,000 in addition to accidental insurance for Rs one lakh.
  • Account holders will get overdraft facility of up to Rs. 5,000.

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