The PMJDY, which got off to a blistering start with public and private sector banks vying to exceed the targets they set for themselves, also includes insurance and pension facilities.
The RuPay debit card being given to the beneficiaries will have an inbuilt accident insurance cover of R1 lakh and an overdraft facility up to R5,000, Modi said. All those who open an account by Republic Day next year will also get a life insurance cover of R30,000. The PM said PMJDY was also aimed at eliminating corruption as it would facilitate routing of subsidies directly into the accounts of intended beneficiaries.
For a glimpse of how banks embraced the scheme, witness the Bank of Maharashtra-hosted mega show at a wedding hall in Pune that normally is home to lavish weddings. The hall was packed and people spilled out on to the lawns of the close to 1,000 people present, 500 were new account holders from in and around Pune.
The countrys largest bank, State Bank of India opened 20 lakh new savings accounts on Thursday through 10,000 camps held across the country. Bank of Baroda said it surpassed the mandate to open 10 lakh accounts while Union Bank of India opened 5 lakh accounts. IDBI Bank said it opened over 3.62 lakh basic savings accounts under PMJDY against the 2 lakh target, and held camps at more than 6,800 locations. Bharatiya Mahila Bank, Indias first womens bank, said it organised 43 camps on Thursday.
The use of debit cards will allow the unbanked to start building a transaction history, which can be a decisive step in initiating them towards financial inclusion. This will also help the banks for better product designing and targeting, said
SBI chairman Arundhati Bhattacharya.
The government would institute a credit guarantee fund post-August 2015, officials said. Bankers say that if the overdraft in these basic accounts go bad, the government would pay a portion of that from this fund.
Right now, one account is being opened for one adult of each household and by 2018, the mandate is to make it two per household, with the compulsory inclusion of the lady of the house.
Chanda Kochhar, MD and CEO, ICICI Bank, said, We aim to open 2.5 million accounts under PMJDY, thereby taking the total number of accounts under our financial inclusion programme to more than 20 million. She said the bank conducted 1,100 camps, in its branches and in villages, spearheaded by seniors. The scheme will help micro industries with an annual turnover of less than R2 lakh to access formal funding. But well have to look at their track record of six months before extending credit through these accounts, said SKV Srinivasan, executive director, IDBI Bank.
Rajiv Anand, president (retail banking) at Axis Bank, said, We have 75 lakh accounts right now in the financial inclusion space. We have been working over two to three days for the PMJDY and opened 1,800 camps. Our early estimates say that about 1 lakh accounts have been opened as part of the inclusion drive.
Modi lamented that after 67 years of independence, not even 67% of the population has access to banking facilities (over 40% of the population are excluded from the banking system). He said banks were queuing up to do business with the rich despite them being not so prompt as the poor in repayment of loans. This leaves the poor in the grip of moneylenders who charge usurious interest rates, he said.
Census 2011 estimated that 58.7% households had access to banking services. Only 54.46% rural households and 67.68% urban households are availing banking services. As per a World Bank Findex Survey done in 2012, only 35% of Indian adults had access to a formal bank account and 8% borrowed from a formal financial institution in the last one year.