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Pradhan Mantri Jan-Dhan Yojna (PMJDY)

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Pradhan Mantri Jan-Dhan Yojna (PMJDY) is a programme for financial inclusion to cover all unbanked households in India, whether in urban or rural area, and aims at providing affordable financial services like savings & deposit accounts, banking services, remittance, credit, insurance, pension etc. Financial inclusion broadly means the delivery of financial services at affordable costs to sections of disadvantaged and low-income groups. The Scheme was announced by the Prime Minister- Shri Narendra Modi - in his independence day speech on 15 August, 2014 and was launched by him on 28 August 2014. (In Hindi, Pradhan Mantri stands for Prime Minister, Jan for people, Dhan means money /wealth and yojna means plan or scheme)

The mission mode objective of the PMJDY consists of 6 pillars. During the 1st year of implementation under Phase I (15 August, 2014- 14 August, 2015), three Pillars namely

  1. universal access to banking facilities
  2. financial literacy Programme and
  3. endowing basic banking accounts after satisfactory operation for six months, with
    • an overdraft facility of Rs. 5000 at a rate of interest of 12% per annum,
    • RuPay Debit card with inbuilt accident insurance cover of Rs 1 lakh and
    • issuance of Kisan Credit Card (KCC) as RuPay Kisan Card, will be implemented.

To get benefit of Accidental Insurance Cover of Rs. 1 lakh, RuPay Debit Card must be used at least once in 90 days (used to be 45 days uptill 25 Nov 2015) and this is available to beneficiaries in the age group of 18-70. Electronic Transfer of subsidies (direct benefit transfer) under various schemes of Government would also be enabled.

Phase II of PMJDY, beginning from 15 August 2015 upto 15 August, 2018 will address

  1. creation of Credit Guarantee Fund for coverage of defaults in overdraft A/Cs
  2. micro insurance and
  3. Unorganized sector Pension schemes like Swavlamban. In addition, in this phase coverage of households in hilly, tribal and difficult areas would be carried out. This is the phase where the hitherto uncovered areas comes in. Moreover, this phase would focus on coverage of remaining adults in the households and students.

Life insurance cover of Rs.30000/- will be available to all account-holders (with Rupay Card) in the age group of 18-59 who are the breadwinners of the family and are opening a bank account for the first time, except Government servants (both retired and serving) and their family members, income tax payees, and beneficiaries of Aam Admi Bima Yojana (another life insurance scheme).

Overdraft facility upto Rs.5000/- will be available to only one person in the family (preferably lady of the house).

In case people are already holding bank accounts, they need not open another bank account to avail of benefits under PMJDY. However, accident cover benefits are available through the RuPay Card. Hence, the existing account holders need to submit an application to the concerned branch to enable them to get a RuPay Debit Card in order to avail of the benefits of insurance / accident covers under PMJDY. Micro credit limit of Rs. 5000/- as overdraft, can also be extended in existing bank accounts on application, depending on the satisfactory conduct of the account.

For the implementation of the Scheme, RBI has enabled creation of small accounts, whereby people who do not have officially valid documents or Aadhaar Numbers can still get bank accounts opened by submitting 2 copies of signed photographs at the bank branch. However, these accounts will be called small accounts and shall normally be valid for 12 months and shall be continued subject to showing of proof that he/she has applied for any of the officially valid document within 12 months of opening of such ‘Small Account’’. These accounts have certain limitations such as balance at any point of time should not exceed Rs. 50,000/-, total credit in one year should not exceed Rs. 1 lakh and total withdrawal should not exceed Rs. 10,000/- in a month.

PMJDY also aims at providing Mobile Banking, offering basic banking facilities like money transfer, bill payments, balance enquiries, merchant payments etc. on a simple GSM based mobile phone, without the need to download application on a phone as required at present in the Immediate Payment Service (IMPS) based Mobile Banking. Transactions can be performed on basic phone handsets. Charges, as applicable by the Telecom Operator (not more than Rs.1.50 per transaction as mandated by TRAI) may be applicable.

PMJDY is a scheme that brings together all other previous initiatives in this regard - like Kisan credit card, Business correspondent model of expanding financial access, micro insurance, micro pension (Swavlamban) etc. - with a wider scope and targeting both rural as well as urban households. Banking Correspondents involved in the proliferation of PMJDY has been exempted from service tax since October 2015 with respect to those specific services provided by them.

The report of the Parliamentary Standing Committee of Finance on the performance and implementation challenges of Jan Dhan Yojna may be seen here.

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