PM of India, Narendra Modi launched the ambitious ‘Pradhan Mantri Jan Dhan Yojana’ which aims to achieve comprehensive financial inclusion. Mr. Modi had announced this scheme on his maiden Independence Day speech on August 15, 2014. On the very first day, a record 1.5 Crore (15 million) bank accounts were opened under this scheme.
‘Pradhan Mantri Jan Dhan Yojana’
The ambitious scheme aims to achieve the gargantuan task of enrolling over 7.5 crore (75 million) households and to open their accounts. In its current phase, the scheme targets to provide ‘universal access to banking facilities’ starting with Basic Banking Accounts with overdraft facility of Rs.5000 after six months and RuPay Debit card with inbuilt accident insurance cover of Rs. 1 lakh and RuPay Kisan Card. The scheme will add micro insurance & pension etc. in the next phase.
The slogan for the Pradhan Mantri Jan Dhan mission is “Mera Khata – Bhagya Vidhaata”.
Every individual who opens a bank account will become eligible to receive an accident insurance cover of up-to Rs. 1 Lakh for his entire family. An additional Rs. 30,000 life insurance cover will be provided for those opening bank accounts before January 26, 2015. Once the bank account becomes active for 6 months and is linked to account holders Aadhar identity, the account holders will be eligible for an overdraft facility of up to Rs. 2500, which will be enhanced to Rs. 5000 over time.
The scheme intends to provide incentives to business and banking correspondents. The banking correspondents function as link for the last mile between savings account holders and the bank by fixing a minimum monthly remuneration of Rs. 5000.
To lay the foundation of a cashless economy is the long term vision of the Jan Dhan Yojana which is also complementary to the Digital India Scheme.
The RBI has shut the overseas payment gateway for credit card transactions within India, saying that the rules need to be followed with respect to e-commerce credit card transactions “essentially taking place between two residents in India”. This means that firms such as Uber will have to follow the two-step authentication procedure that it was able to evade by virtue of having an overseas payment gateway. Its competitors welcomed the move. The apex bank asked banks to make sure that payments should be in rupees in cases when the credit card is not presented physically.
The move from RBI will have an immediate impact on the much contended taxi business, especially Uber, which has swiftly attracted users in India. The San Francisco based company has so far been able to charge credit cards of users without authentication. The users of Uber are automatically charged at the end of their ride based on card details furnished at the time of enrollment. They are able to do so because authentication is not needed when someone buys from websites based overseas. This loophole has now been closed by the central bank.
The RBI has clarified that “such camouflaging and flouting of extant instructions on card security, which has been made possible by merchant transactions (for underlying sale of goods / services within India) being acquired by banks located overseas resulting in an outflow of foreign exchange in the settlement of transactions, is not acceptable as this is in violation of directives issued under the Payment & Settlement Systems Act 2007 besides the requirements under the Foreign Exchange Management Act, 1999”.
In order to prevent fraudulent activities the central bank had made it mandatory for banks to put in place additional authentication based on information not visible on the cards for all online transactions.
On behalf of IBA, Mr Bhasin, will be associated with “Pradhan Mantri Jan-Dhan Yojana” Mission, headed by Union Finance Minister.
Indian Bank Association (IBA)
IBA is the representative body of CMDs and CEOs of Public Sector, Private Sector and Foreign banks, which plays advisory role and presents the views of banking Industry to various Ministries of Government of India for policy framing and to RBI on regulatory matters.
Along with decline in the overall Credit Deposit (CD) ratio of banks in Punjab for the period ending June 2014, the CD ratio of state’s rural sector has been registered the “lowest” in comparison to that of in urban and semi-urban sectors. As per latest report of State Level Bankers’ Committee (Punjab), the CD ratio of banks in Punjab’s rural sector plunged to 60.76% as on June 2014 from 63.21% in corresponding period of year 2013.
“Credit Deposit (CD) ratio” refers to how much a bank gives as loans of the deposits it has mobilized. The low ratio shows banks are not fully utilizing their resources for banking activity.
The Punjab government had already expressed concern over the low deposit ratio in rural sector. It had even told the banks to increase the ratio. The overall CD ratio of Punjab has also reduced by 2.20% to 77.70% as on June 2014.