Highlights of PMJDY (Jan Dhan Yojana)

Highlights of PMJDY

As per Nandan Nilekani Report of the Task Force on Aadhaar Enabled Unified Payment Infrastructure, Feb 2014: "Another class of customer (largely rural, low-income, uneducated) have been issued smart cards that are operated through Bank Mitra (Business Correspondent). This innovation through the use of technology made it possible to bring banking services to un-served areas and un-served population for the very first time. However, this innovation has also created proprietary technology islands, where consumers cannot access their bank account through other channels. The inconvenience of the channel often leads customer to withdraw all the money in their account." In order to ensure that this does not happen in the present mission, inter operability of the payments will be ensured both through the debit card and through Aadhaar Enabled Payments at the Bank Mitra (Business Correspondent) Outlet as and when the reach of Aadhaar extends to a substantial part of the country. In the past, it was seen, that many of the accounts opened did not have sufficient number of transactions for banks to find them viable. This was because these accounts were being opened in isolation without proper linkages. Under the present plan, this anomaly is proposed to be removed by its six pillar approach. Moreover, the accounts will also be ATM enabled to get the benefits of flexibility. The approach under this pillar of the campaign would be as follows:

1) Opening of SB account with zero balance (BSBDA). For ease of opening of accounts Banks would be advised to take benefit of e-KYC approach. Those banks that have not activated the e-KYC facilities would need to incorporate the same up to the BC level.

2) In order to cut down time on account opening, under the campaign, a one page account opening form has been designed which may be seen at Annexure 8. All Banks will make suitable amendments in their account opening forms immediately.

3) Each SB account holder would be given ATM/Debit (RuPay) card. In the country there are estimated 13.8 crore agriculture land holders, out of which KCC have been provided to 10.2 crore land owners/agriculturist. In the present campaign Endeavour shall be made to provide all KCC holders with RuPay KCC card and non agriculturist may be provided with RuPay debit card. The card will have inbuilt accident insurance of 1 lakh.

4) It has been ascertained from National Payments Corporation of India (NPCI) that the RuPay cards to be issued do not have a production constraint and the manufacturing capacity is estimated to be about 18 lakh per day. The personalization capacity available is also 7.75 lakh per day.

5) The network of Cooperative/Urban Cooperative Banks which are on CBS would also be used for account opening, of uncovered households.

6) This account would be linked with the Aadhaar number of the account holder and would become the single point for receipt of all Direct Benefit Transfers (DBT) from the Central Government /State Government /Local Bodies. Presently the Direct Benefits Transfer scheme under LPG/Gas delivery has been stopped and the Dhande committee appointed to study the scheme has submitted its report. The other Government schemes under DBT are containing but the Government Departments are yet to pay the commission due to Banks. No commission has been agreed to in the DBT for LPG by the Department of Expenditure (DoE) on the argument that these are normal operations for the Banks while the 2% commission in other schemes is to compensate banks for the Bank Mitra (Business Correspondent). Department of Financial Services (DFS) has taken up the matter with DoE arguing that Banks have to do substantial other works in operationalizing the scheme including dealing with customer grievances but there has been no result of these efforts. This anomaly would need to be corrected in order to ensure complete buy-in of the banks for the DBT schemes. The DBT in LPG which was the largest of all DBT schemes would need to be re-started.

7) There would be a convergence with the efforts of UIDAI to enroll beneficiaries for Aadhaar number during account opening. The e-ID numbers so generated during this campaign will be captured in the bank accounts opened. As and when the UID numbers get generated, the e-ID will be replaced by the UID number.

8) It is proposed that DBT including DBT in LPG should be pursued to make the programme of financial inclusion a success. The list of DBT schemes is given in Annexure - 6.

9) A McKinsey (2011) study estimated that connecting every Indian household to a digital payment system and automating government payment flows can save $22 billion a year, 80% of it from reduced leakages. Each account holder would be provided financial literacy sessions on how to manage his/her money and credit facilities.

10) The Accounts would be opened in camp mode to ensure that account may be opened for all eligible residents  in time bound manner and there after account opening process to take place in ongoing basis. The dates / day of the camp to be announced in advance through adequate and effective publicity locally available. The camps would be organized in coordination with the Government & Bank officials. In each of the camp Bank Mitra( Business Correspondent) & Bank official/s to ensure availability of sufficient AOFs and other stationary for opening of account.

11) Bank may be required to hold more than one camp in each village till 100% saturation level is achieved in that village.

12) Convergence with the efforts of the National Rural Livelihoods Mission (NRLM) would be sought in order to open bank accounts for the Self Help Group (SHG) members.

13) The Central Provident Fund Commissioner (CPFC) has been directed to get bank accounts opened for all members of the EPFO as part of Universal Account Number (UAN) exercise and financial inclusion policy of the Govt. of India for flow of funds through the accounts. The CPFC shall be launching special campaign for opening of bank accounts of all its members during the months of August and September, 2014, till March, 2015. For opening of bank accounts under Pradhan Mantri Jan-Dhan Yojana of all uncovered households, it has been decided that for better coordination with the Employee Provident Fund Organization (EPFO), the SLBCs may co-opt Additional Provident Fund Commissioner (PFC)/RPFC GrI as its members. LDMs would also co-opt a representative of EPFO as members of the District Level Bankers’ Committee and organize camps at the Provident Fund establishments.

14) Overdraft (OD) up to 5,000/- would be provided to the customers after six months of satisfactory performance of saving/credit history. This OD facility would be covered by the Credit Guarantee Fund proposed to be created by the Government which is further described in section 7.4 of this document. The Rate of Interest on these accounts is proposed @base rate + 2% or 12% whichever is lower (Including the fees to be paid to Credit Guarantee fund). All Government benefits to flow into this account – facilitating servicing of interest & reducing the chances of account becoming dormant.

15) Banks will carry out a ground survey within three months of the start of the campaign for exact report on coverage of households with banking facilities.

Whenever all the households of a district is provided with bank account, the District Magistrate will issue a certificate to this effect and District will be declared 100% covered. Similarly, in states where all the districts are covered will be declared as 100% covered state.