On 15th August 2014, in his 1st Independence Day speech, PM Mr. Narendra Modi, announced the National Mission on financial inclusion titled Pradhan Mantri Jan Dhan Yojana. Prime Minister launched the program in the National capital while simultaneously it was launched in other states and district headquarters.
What is Financial Inclusion?
Financial inclusion is the delivery of financial services at affordable cost to sections of disadvantaged and low-income segments of the society.
The availability of banking services to the entire population without discrimination is the prime objective of the financial inclusion. Financial inclusion is expected to bring a large section of the population out of the clutches of the money lenders and make provision so that they can avail the large range of the financial benefits that are out there and are available.
Before the PM Jan Dhan Yojana
Before the launch of Jan Dhan Yojana, there were other schemes as well. RBI and the Government of India had taken up a large number of initiatives to ensure financial inclusion. Nationalization of banks, expansion of bank branches to the rural areas, Priority sector lending, formation of NABARD and RRBs, formation of the SHGs and the State specific approach for the government sponsored schemes are just a few to mention.
Then comes the business correspondent model. The Business Correspondent model or the BC model is the art of “Swabhimaan” scheme. The government decided to use the NGOs and the Self Help Groups and other Micro Finance Institutions to bring about financial inclusion.
The BCs provide basic banking service e.g. opening of bank accounts, cash deposits, cash withdrawal, and transfer of funds etc. to the rural or the remote households.
Pradhan Mantri Jan Dhan Yojana (PMJDY)
PMJDY stands on 6 pillars and under 2 phases.
The First Phase is from 15th August 2014- 14th August 2015. This phase has 3 pillars: 1) universal access to banking facility 2)Financial Literacy program 3) Provide basic banking acco9unts with an over draft of 5000/-rupees after 6months and RuPay debit card with an Inbuilt Accidental insurance upto 1 lakh and RuPay Kisan Card.
The Second Phase will be from 15th August 2015 to 15th August 2018. This phase will have 3 pillars: 1) Creation of Credit guarantee Fund for coverage of defaults in overdraft A/C. 2) Micro Insurance. 3) Unorganized sector pension scheme like “swavlamban”. This phase will cover the households in the hilly region. It will also focus on bringing additional members of household and students.
Under PMJDY, banking sector plans to itself to set up 50000 Business Correspondents. Gram Dak Sevaks in the rural areas are proposed as Business Correspondents of the bank. The Plan proposes to channel the government benefits to the account of the beneficiaries. The government plans to start the DBT scheme in LPG, MGNREGS under Ministry of Rural Development etc. This time, households are targeted instead of villages. Both village and town folks are targeted to be brought under this scheme unlike only villagers as earlier.
Swabhimaan and Banking Correspondents
Swabhimaan is a Govt. of India initiative to bring about financial inclusion. It was initiated in 2011 by the then finance minister, Mr.Pranab Mukherjee. Swabhimaan is an initiative of the UPA government aimed at bringing banking to the door step of the rural poor.
Services under the Swabhimaan scheme
1) To bring basic banking facility to village with a population of 2000 and above.
2) Open banks accounts; provide need-based credit and remittance facilities. Help in promoting financial literacy in rural India.
3) Provide branch less banking campaign throughout the country through the use of technology.
4) Government subsidies and social security benefits to be directly credited to the beneficiaries so that they could draw money from the business correspondents in the village itself.
5) Banks will work together with the UDAI to open new bank accounts.
Banking Correspondents
BC arrangement essentially means enrolling customers and enabling the transaction of the customers at Customer Service points (CSPs). The outlets of the BCs will need to undertake BC activity through any of the different technologies adopted by the Bank. These can be Card Technology, Kiosk Banking Technology and the Cell phone messaging Technology.
Card technology:- Two kinds of card are there a) smart card, which has a chip inserted in it.b) simple plastic card. The BC open a no-frills account of the customer. They can operate savings account online or offline.
Kiosk Banking tech :- use of fingerprints in operating the account. The BCs open a no-frills account for the customer. The accounts are operated online always.
Cell phone account: this is not bio-metric enabled and has different security parrten. Any one with a cell phone can open a no-frills account.
Eligible candidates for banking correspondents or BCs:
- NGOs and MFIs set up under Indian Societies Act. Note: NBFCs are not a part of this. NBFCs that do not take deposits can be a BC.
- SHG members
- Post office – Dak Sewaks,
- Retired bank employees
- Ex-servicemen
- Govt employee
- Agents of small banking scheme
- Individual members of farmers’ club
- Individual operators of rural multipurpose Kiosks/ village call centers
- Agri business centers etc.
A lot of questions were asked on Jan Dhan Yojana in SBI Clerical Interview round and other interviews (as told by candidates who have appeared for these interviews). It is therefore advisable to prepare this topic for the coming IBPS PO and Clerical Interview round