1. Social security rollout: Centre calls meet with banks, insurers

Social security rollout: Centre calls meet with banks, insurers

Deadlines, targets for three Budget schemes likely to be fixed.

By: | New Delhi | Updated: March 9, 2015 1:21 AM

The Centre has called a meeting of banks and insurers on March 11 to roll out, with fixed deadlines and targets, the three schemes announced in Budget fy16 to ensure universal social security for the underprivileged.

The schemes — the Pradhan Mantri Suraksha Bima Yojana (or PMSBY, providing accidental death risk cover), Atal Pension Yojana (for a defined pension) and Pradhan Mantri Jeevan Jyoti Bima Yojana (or PMJJBY, covering both natural and accidental death risk) — will be implemented on a mission mode like the Pradhan Mantri Jan Dhan Yojana, with the full backing of banks and insurance firms, financial services secretary Hasmukh Adhia told FE.

He said the new schemes will be implemented initially through the existing bank account holders, and their premium/pension amounts can be either deposited by them in their accounts or automatically debited provided the accounts have the required amount in them.

The deadlines and targets for the new schemes will be fixed during the meeting and the progress will be continuously monitored by the Centre to ensure that they are met, Adhia said. At the end of February, 13.7 crore accounts had been opened under PMJDY and 12.2 crore RuPay debit cards were issued. These new accounts have mobilised deposits of Rs 12,694 crore.

Calling the three schemes the “biggest reform measure” in Budget FY16, Adhia said: “Any citizen with a bank account and aadhar number can join. All he/she has to do is give a signed letter to the bank stating his/her name and of the nominee. The bank will enrol him/her as rest of the details will already be with it.”

“We will push the new schemes on a mission mode like the PMJDY, take out common advertisements and hold financial literacy campaigns. Banks and insurance companies will jointly implement them. Bank mitras (banking correspondents) will also get good incentives for ensuring more subscribers,” he added.

These schemes will ensure at least Rs 12 (which the subscribers have to pay annually as premium for accidental death risk of Rs 2 lakh under PMSBY) go into all the zero balance accounts opened under PMJDY, thereby making them accounts with deposits, Adhia said. At the end of February, around 8.6 crore accounts were zero-balance and the government was trying to ensure that these accounts also mobilise deposits.

“Even the poorest of the poor will be able to afford to deposit Rs 12 per year and they will do it as the insurance cover comes sans conditions. This product is simple and easy to understand. I see crores of rupees going in as bank deposits,” he added.

The PMSBY incentive is, of the Rs 12 given by a subscriber, Re 1 goes each to the bank and the bank mitra (for getting subscribers for the scheme). Also, banks are free to give their Re 1 commission to the bank mitra as additional incentive. The annual premium for PMJJBY (which covers both natural and accidental death risk of Rs 2 lakh) is just Rs 330, or less than Re 1 per day, for age group 18-50. On the structure of PMJJBY, Adhia said that of the Rs 330, Rs 289 will go to the insurance fund while the remaining Rs 41 will go as commission and bank charges. “If a bank mitra gets 100 people as subscribers from one village, he will make Rs 3,000. Since it is not a term product, the bank mitra will have to ensure that new subscribers join the scheme every year,” Adhia added.

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