Banking On Jan Dhan Yojana

Banking On Jan Dhan Yojana

PM Narendra Modi has emphasised the need for access to financial services for around 500 million Indians who currently do not possess bank accounts. To prevent moneylenders from exploiting poor people, the NDA government has proposed a scheme called Jan Dhan Yojana. India may be the third biggest economy in the world but financial security has been far from achieved for many poor persons in the country.

The PM mentioned in the Independence Day speech about how moneylenders exploit poor people and this has even resulted in suicides of those facing financial destitution due to inability to pay their loan. Modi has also aimed towards greater financial inclusion as there is an effort to make banks affordable for even the common man.

According to statistical estimates, around 146,373 farmers committed suicide between 2004 and 2012, as per the government records. Droughts are the reason why farmers also experience pressure. While irrigation projects can help stave off the ill effects of droughts, banks can be the solution for warding off avaricious moneylenders from short-changing the farmers.

The Jan Dhan Yojana is set to come to the rescue of the farmers and poor persons. This scheme will ensure that banks work towards expansion of indurance and credit services to low income Indians so far not included in the country's financial system. Modi has also stressed that the new scheme will provide debit card and insurance of 1 lakh rupees for the entire family.

The Jan Dhan Yojana or the Scheme for People's Wealth aims at extending banking and accident insurance coverage to those who are currently existing outside the nation's financial system in urban as well as rural areas.

Currently, media reports cite that the World Bank estimates nearly two-fifth of the 1,27 billion persons in India lack access to bank accounts. This is far greater than other nations such as Bangladesh and Sri Lanka. Banks and mobile phone companies have also been encouraged to form alliances and liberalise regulations by RBI governor Raghuram Rajan.

The trouble is that private and foreign banks concentrated mostly on urban and corporate clients. They have no monetary or profit incentive for catering to the poorer clients. Considering that nearly 40% of the Indian citizens live on less than 1 dollar per day, a lot of Indians are not presently part of the financial system.

A biometric database has already been created by the UPA government. The NDA government plans to develop this further as well. Under the Jan Dhan Yojana, the person opening a bank account will get a Rupay debit card as well as a 1 lakh rupees accident insurance policy. The bank account opener will also get Rs. 30,000 life insurance cover. With a good start to the Yojana, efforts are on to remove financial untouchability in India.