Pushing for 100 per cent financial inclusion in the country, Prime Minister Narendra Modi will unveil the NDA government’s ambitious action plan envisaging two bank accounts for every household in two phases on August 15.
While the first phase will focus on providing basic banking services to every household, the second phase that would start from August 15, 2015 would include micro-insurance and unorganised sector pension schemes like Swavlamban.
The government is also keen that the banking sector should add 7,000 branches and 20,000 ATMs as part of the plan that will be launched by Modi in his Red Fort address on the Independence Day.
Following directions from the Prime Minister’s Office, the finance ministry has asked the Indian Banks Association (IBA), the apex body of banks, to prepare an immediate time bound action plan under which about 12 crore accounts in rural areas and 3 crore in urban areas would be opened and about 50,000 new Business Correspondents would be engaged in rural areas.
This is a steep jump from the Census 2011 estimates that of the 24.67 crore households in the country, only 14.48 crore had access to banking services — 9.14 crore households in villages and 5.34 crore in cities.
Currently, the banking network comprises of 1,15,082 bank branches and 1,60,005 ATMs.
“In view of the priority accorded by the government to the plan, I would request you to accord top priority to the programme and allocate necessary resources for implementation of the same as per the timelines,” financial services secretary GS Sandhu directed IBA chairman KR Kamath in a letter dated July 9, 2014.
The plan being prepared for the IBA says two adults (husband and wife) in every household would be provided bank accounts with an overdraft facility of Rs 5,000 as well as a RuPay debit card with a personal accident insurance cover of Rs 1 lakh.
Apart from providing banking and pension and insurance services, the government will also focus on financial literacy as well as creation of a credit guarantee fund for coverage of defaults in overdraft accounts.
Sandhu had already held two rounds of discussions with top bankers on implementing the government’s plan.
Finance minister Arun Jaitley had mentioned the revamped financial inclusion plan in the Union Budget 2014-15 but it will be formally launched as the Prime Minister’s address to the nation from Red Fort on Independence Day.
The NDA government’s financial inclusion plan will have three major shifts from the programme of the UPA government.
First, instead of focusing only on villages as the unit of coverage, financial inclusion efforts would be targeted towards covering households.
Second, apart from villages, now urban areas would also benefit from the efforts towards financial inclusion.
Third, …continued »