PM Modi' announces "Pradhan Mantri Jan Dhan Yojana" on Independence Day
In his maiden Independence Day speech from the ramparts of the Red Fort, PM Narendra Modi announced a new financial scheme named ‘Pradhan Mantri Jan Dhan Yojana’ to help the poor open bank accounts which will come bundled with a debit card and life insurance cover.
PM Modi observed that there are crores of families that have mobile phones, but no bank account. He stressed that access to banking services is crucial to protect the poor from falling prey to moneylenders and increasing cases of suicides by farmers who fall in this trap.
The new scheme has a very different approach from the financial inclusion approach so far. The scheme seeks to provide a bank account to every poor in the country, and the account holder will be provided a debit card and a life insurance cover of Rs 1 lakh.
The government has set a target of 7.5 crore new accounts by 2018 via regular brick-and-mortar branches, deviating from UPA’s initiative of banking services in cities with certain minimum population.
The Union Cabinet has already approved the two-phase financial inclusion scheme under which bank accounts will be opened for 15 crore poor persons with an overdraft facility of Rs.5,000 and accident insurance of Rs.1 lakh. The scheme seeks to provide two accounts to 7.5 crore identified households by August 2018.
Key features of ‘Pradhan Mantri Jan Dhan Yojana’:
- Rs.5,000 overdraft facility for Aadhar-linked accounts
- Ru Pay Debit Card with inbuilt Rs.1 lakh accident insurance
- Minimum monthly remuneration of Rs.5,000 to business correspondents who will provide the last link between the account holders and the bank.