FINANCIAL INCLUSION &GOVERNMET SCHEME

Presented by, Abinash Kr.

Mandilwar Chief Manager & Faculty

Manager Bank of India, Staff Training College, Bhopal, Madhya Pradesh

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“The future lies with those companies who see the poor as their customers”

~C.K.Prahalad

The Potential of the The Potential of the UnreachedUnreached

FINANCIAL EXCLUSION

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Financial Exclusion

NoSavings

No Insurance

Noassets

No bank account

No access tomoney advice

No affordablecredit

FINANCIAL INCLUSION The term "financial inclusion" has gained

importance since the early 2000s, a result of findings about financial exclusion and its direct correlation to poverty.

Former United Nation Secretary-General Kofi Annan, on 29 December 2003, said: ”The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance.

In the Indian context, the term ‘financial inclusion’ was used for the first time in April 2005 in the Annual Policy Statement presented by Y.Venugopal Reddy, the then Governor, Reserve Bank of India.

FINANCIAL INCLUSION IN INDIA In India, RBI has initiated several measures to achieve

greater financial inclusion, such as facilitating no-frills accounts and GCCs for small deposits and credit. Some of these steps are;

Opening of no-frills accounts: Basic banking no-frills account is with nil or very low minimum balance as well as charges that make such accounts accessible to vast sections of the population. Banks have been advised to provide small overdrafts in such accounts.

Relaxation on know-your-customer (KYC) norms: KYC requirements for opening bank accounts were relaxed for small accounts in August 2005,thereby simplifying procedures by stipulating that introduction by an account holder who has been subjected to the full KYC drill would suffice for opening such accounts. It has now been further relaxed to include the letters issued by the Unique Identification Authority of India containing details of name, address and Aadhaar number.

FINANCIAL INCLUSION IN INDIA Engaging business correspondents (BCs): In January

2006, RBI permitted banks to engage business facilitators (BFs) and BCs as intermediaries for providing financial and banking services.

Use of technology: Banks have been advised to make effective use of information and communications technology (ICT), to provide doorstep banking services through the BC model where the accounts can be operated by even illiterate customers by using biometrics, thus ensuring the security of transactions and enhancing confidence in the banking system.

Adoption of Electronic Based Transfer (EBT): Banks have been advised to implement EBT by banking through BCs to transfer social benefits electronically to the bank account of the beneficiary and deliver government benefits to the doorstep of the beneficiary.

FINANCIAL INCLUSION IN INDIA GCC: With a view to helping the poor and the

disadvantaged with access to easy credit, banks have been asked to consider introduction of a general purpose credit card facility up to Rs.25,000/-at their rural and semi-urban branches.

Simplified branch authorization: To address the issue of uneven spread of bank branches, in December 2009, domestic scheduled commercial banks were permitted to freely open branches in tier III to tier VI centres with a population of less than 50,000 under general permission.

Opening of branches in unbanked rural centres: To further step up the opening of branches in rural areas so as to improve banking penetration and financial inclusion rapidly, the need for the opening of more bricks and mortar branches, besides the use of BCs, was felt.

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SCOPE IN FINANCIAL INCLUSIONFinancial Inclusion should include access to financial products and services like,Bank accounts – check in accountImmediate Credit Savings productsRemittances & Payment servicesInsurance - HealthcareMortgageFinancial advisory servicesEntrepreneurial credit

BASIC CHALLENGES OF FINANCIAL INCLUSION

Coverage; Access to Diversified Financial Products and Services;

Delivery Model - Day to day transactions ;

Cost-effective technology;Customer education/financial advice;

Change in banker’s mindset;

CONCLUSION

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Financial Inclusion is a win-win situation for the financially excluded, the Corporate, the Govt. and the Banks.

Bankers can support by financing the Agri products including their preservation and sales.

Corporate can sell / market their products to the large untapped rural markets.

Banking Services and products including consumer loans; Micro-finance Services.

Farm Equipment, Home & Construction Loans. Credit Cards, Debit Cards, etc., Bill Payment –

Electricity, Utilities, etc. Payment Gateway, ATMs.

BASIC SAVINGS (NO FRILL ACCOUNT) Opening of accounts of person of low income group. No Joint Account, Only one person & Individual. Nomination compulsory. Simplified KYC Norms & Photograph required. Balance will not exceed Rs.50,000/-in any point of time. Total Turnover should not exceed Rs.100,000/- in a F/Y. Total withdrawals not exceed Rs.10,000/- in a

month. Passbook , Statements & ATM card may be issued. Max. withdrawal twice in a month. Additional withdrawal, Statements of account & Duplicate

Passbook will charge Rs. 15/months. Scheme Code: Small A/c SB-106, PMJDY SB-104/105 BC:SB-177/181

PRADHANMANTRI JAN DHAN YOJANA(PMJDY)

INTRODUCTION On 15th August 2014, India’s prime minister

announced the financial inclusion mission titled “Pradhanmantri Jan-Dhan Yojana”.

Jan-Dhan Yojana roughly translates into English as “People’s Wealth Scheme”.

India’s Prime minister Narendra Modi announced the launch of this scheme at the Red Fort on the occasion of India’s Independence Day.

In all, 600 programmes and 77,852 camps were organised on the first day for the opening of bank accounts.

PRADHANMANTRI JAN DHAN YOJANA The name “Jan Dhan” was chosen through an

Online Competition on the MyGov Platform, received more than 6000 suggestions from Indian citizens.

7 individuals suggested “Jan Dhan” as tagline. Slogan – Mera Khata-Bhagya Vidhaatha. Primarily the PMJDY Scheme is meant for those

who do not have a savings bank account. According to the census 2011,only 58% of

Indian citizens are having a bank account. Scheme Code: SB-104/105 BC:SB-177/181

OBJECTIVE OF PMJDY To bring poor financially excluded people into banking

system. To provide benefits of government subsidy schemes

directly. Digital India: Basic accounts services available on

simple phones. Direct benefits transfers for LPG could be routed

through these accounts. MGNREGA could also ride on the new accounts. Micro Insurance. Unorganised sector pension schemes like

Swavlamban. Access to Pension, insurance products.

BENEFITS OF OPENING BANK A/C UNDER PMJDY

1) Account can opened with zero balance.2) Not required to maintain any minimum balance.3) Ru-Pay enabled debit card.4) Accident insurance up to 100,000/- free of cost.5) NPCI will pay the premium which is Rs. 0.47 per card.6) Medical insurance cover of 30,000/-.7) After six months of satisfactory operations, the account would

be eligible for Rs 5,000 overdraft facility. 8) Overdraft facility up to Rs.5000/- is available in only

one account per household, preferably lady of the household.

9) Interest charged by bank on OD facility @ BR+2% or 12% whichever is lower.

10) Accidental Insurance Cover, RuPay Debit Card must be used at least once in 45 days.

DOCUMENTS REQUIRED TO OPEN AN ACCOUNT UNDER PRADHAN MANTRI JAN-DHAN YOJANA

If Aadhaar Card/Aadhaar Number is available then no other documents is required. If address has changed, then a self certification of current address is sufficient.

If Aadhaar Card is not available, then any one of the following Officially Valid Documents (OVD) is required: Voter ID Card, Driving License, PAN Card, Passport & NREGA Card. If these documents also contain your address, it can serve both as “Proof of Identity and Address”.

If a person does not have any of the “officially valid documents” mentioned above, but it is categorized as ‘low risk' by the banks, then he/she can open a bank account by submitting any one of the following documents: Identity Card with applicant's photograph issued by

Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks and Public Financial Institutions;

Letter issued by a gazette officer, with a duly attested photograph of the person.

MILESTONES ACHIEVED UNDER PMJDY Banks have opened 17.74 Crore accounts under PMJDY with

deposit of more than 22000 crores.

Aadhaar has been seeded in 41.82% of account opened under PMJDY

To ensure universal banking access more than 1.26 lakhs Bank Mitras have been deployed with on- line devices capable of e-KYC based account opening and interoperable payment facility.

131012 Mega Financial Literacy camps were organized by banks under PMJDY ‘in coordination with various agencies and  89876 Financial Literacy counters, to spread awareness on PMJDY, use of RuPay cards etc. 147418 students in 2567 schools/collage were imparted training on Financial literacy from September 2014 to April 2015.

MILESTONES ACHIEVED UNDER PMJDY

More than 10 lakhs accounts have been found eligible for Overdraft facility. Out of these overdraft facility has been availed by 164962 account holders.

 847 Claims of Life cover of Rs.30000 and 389 Claims of accident insurance cover of Rs. 1 lakh have been successfully paid.

As on 22nd August, 2015, 8.17 crore beneficiaries have been enrolled under the Pradhan Mantri Suraksha Bima Yojana and 2.76 crore have been enrolled under Pradhan Mantri Jeevan Jyoti Bima Yojana.  6.83lakh account holders have been enrolled under Atal Pension Yojana.

 Zero balance accounts in PMJDY have declined from 76% to 45.74% from September 2014 to  19thAugust 2015.

CURRENT STATUS OF PM JAN DHAN YOJANASTATUS OF ACCOUNTS AS ON 03.08.2016

Bank Name

RURAL (crores)

URBAN(crores)

TOTAL(crores)

NO OF RUPAY CARDS

AADHAAR SEEDED

BALANCE IN ACCOUNTS

% OF ZERO-BALANCE-ACCOUNTS

Public Sector Bank

10.02 7.87 17.89 14.80 9.19 32184.76 24.45

Regional Rural Bank

3.50 0.57 4.07 2.83 1.58 7083.58 21.17

Private Banks 0.52 0.32 0.84 0.78 0.35 1526.52 36.81

Total 14.04 8.77 22.81 18.41 11.11 40794.85 24.32

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ELIGIBILITY FOR ATAL PENSION YOJANA

All bank account holders may join APY. APY is applicable to all citizen of India aged between 18-40 years.

Aadhaar will be the primary KYC. Aadhar and mobile number are recommended to be obtained from subscribers for the ease of operation of the scheme.

If not available at the time of registration, Aadhar details may also be submitted later stage.

HIGHLIGHTS OF ATAL PENSION YOJANA Under the APY, there is guaranteed minimum monthly

pension for the subscribers ranging between Rs. 1000 and Rs. 5000 per month.

The benefit of minimum pension would be guaranteed by the GoI.

GoI will also co-contribute 50% of the subscriber’s contribution or Rs. 1000 per annum, whichever is lower.

Government co-contribution is available for those who are not covered by any Statutory Social Security Schemes and is not income tax payer

GoI will co-contribute to each eligible subscriber, for a period of 5 years who joins the scheme between the period 1 st June, 2015 to 31 st December, 2015.

The benefit of five years of government Co-contribution under APY would not exceed 5 years for all subscribers including migrated Swavalamban beneficiaries.

IMPORTANT INFORMATION FOR SUBSCRIBER

Charges for defaultBanks are required to collect additional amount for delayed payments, such amount will vary from minimum Re 1 per month to Rs 10/- per month as shown below: Re. 1 per month for contribution upto Rs. 100 per month. Re. 2 per month for contribution upto Rs. 101 to 500/- per month. Re 5 per month for contribution between Rs 501/- to Rs. 1000/- per month. Rs 10 per month for contribution beyond Rs 1001/- per month.Important information for subscriber:Discontinuation of payments of contribution amount shall lead to following: After 6 months account will be frozen.

After 12 months account will be deactivated. After 24 months account will be closed.

EXIT, WITHDRAWAL & PENSION PAYMENT

On completion of 60 years, the subscriber will get the guaranteed minimum monthly pension, or higher monthly pension, depending on the investment returns.

In exceptional circumstances, i.e., in the event of the death of beneficiary or specified illnesses, as mentioned in the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) Regulations, 2015, before the age of 60 years, the accumulated pension wealth till date would be given to the nominee or the subscriber, as the case may be.

EXIT, WITHDRAWAL & PENSION PAYMENT

In case a subscriber, who has availed Government co-contribution under APY, chooses to voluntarily exit APY before the age 60, he shall only be refunded the contributions made by him to APY, along with the net actual interest earned on his contributions (after deducting the account maintenance charges), whereas, the Government cocontribution, and the interest earned on the Government co-contribution, shall not be returned to such subscribers.

PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA (PMJJBY)

Age of the Insured – Bank account holders aged between 18 and 50 years are eligible to apply for this scheme. (Up to age of 55 years)

Premium Amount – Less than Re. 1 a day or an annual premium of Rs. 330 is what you need to pay to get a life cover of Rs. 2 lacs.

No insurance claim will be entertain up to 45 days from date of enrollment.

Insurance premium of Rs. 330/- is appropriated in following ways.:Rs. 289/- premium per member to insurance company.Rs. 30/- premium per member to BC/Micro/Corporate agentRs. 11/- premium per member to bank as administrative Expenses

In Bank of India, scheme is administered by SUD-Life

PMJJBYAuto Debit Facility – Annual premium of Rs. 330

will get deducted from your savings bank account through auto debit facility.

(You will have to give your consent for auto debit of premium from any one of your bank accounts at the time of enrolling for this scheme).

Toll-Free Numbers – 1800 110 001 / 1800 180 1111 – These two are the National Toll-Free Numbers for this scheme. You can check the state-wise toll-free numbers from this link – State-Wise Toll Free Numbers.

Know Your Customer (KYC) – Aadhaar Card issued by the UIDAI will be the primary requirement for your KYC under this scheme.

PRADHAN MANTRI SURAKSHA BIMA YOJANA (PMSBY)

Policy Coverage – The scheme offers to provide you or your family a cover of up to Rs. 2 lacs in case of any mishappening, resulting into death or disability of the insured.

In case of death or full disability, you or your family will get Rs. 2 lacs and

in case of partial disability, you will get Rs. 1 lac.( Full disability means loss of both eyes or both legs or both hands,

whereas partial disability means loss of one eye or one leg or one hand.)

Age of the Insured – Savings bank account holders aged between 18 years and 70 years are eligible to apply for this scheme.

Premium Amount – It costs you just Rs. 12 in annual premium for having an accidental death or disability cover of Rs. 2 lacs under this scheme.

(It works out to be just Re. 1 a month, which is extraordinarily low. )

PMSBYInsurance premium of Rs. 12/- is appropriated in following

ways.:Rs. 10/- premium per member to insurance company.Rs. 1/- premium per member to BC/Micro/Corporate agentRs. 1/- premium per member to bank as administrative Expenses

In Bank of India, scheme is administered by New India Assurance Co. Ltd

Auto Debit Facility – You will be required to provide your consent for auto debit of Rs. 12 as the annual premium from any one of your bank accounts at the time of enrolling for this scheme.

Toll-Free Numbers – 1800 110 001 / 1800 180 1111 – These two

are the National Toll-Free Numbers for this scheme. Know Your Customer (KYC) – Aadhaar Card issued by the UIDAI

will be the primary requirement for your KYC under this scheme. Application Form – Here you have the link to the application form

for you to enroll yourself for this scheme – Application Form for PMSBY