Sep 01 2014 : The Economic Times (Delhi)
Fake Accounts may Cloud `Jan Dhan' Plan
Atmadip Ray
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Kolkata:
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Attached insurance cover gives rise to duplicates, which may be as high as 15th of newly opened acs; experts call for proper screening
Prime Minister Narendra Modi's financial inclusion drive is off to a flying start, but some who enrolled under the Pradhan Mantri Jan Dhan Yojana may have accounts elsewhere and could have been persuaded to open new ones because of the attached insurance cover. This could account for about a fifth of the newly opened accounts, top bankers said, although there's absolutely no way of knowing for sure yet.On the launch day, August 28, banks opened 1.5 crore accounts through 77,852 special camps held across the country, finance minister Arun Jaitley said. That exceeded the 1 crore target.
The programme is aimed at making financial services available to every household instead of taking a villagebased approach followed by the previous Manmohan Singh-led United Progressive Alliance government. Some senior bankers estimate those who already have accounts at 15-20% of the total. “At present, we are opening new accounts under the Jan Dhan scheme for everyone who is coming to us. The screening will be done later,“ United Bank of India executive director Deepak Narang told ET.“A survey has to be done at the rural level to identify the finan cially excluded pop ulation.“
State Bank of India deputy managing director Sunil Sri vastava said there could be some dupli cation of financial inclusion accounts, but it would be diffi cult to put a number to it. “Even if there is 5-10% repetition, still 90% people have ounts. This is going to received new accounts. This is going to be a game-changer,“ Srivastava said.
The accounts come bundled with ` .1 lakh accidental insurance cover, a . 5,000 overdraft (after six months of op` eration), a micro-pension and a RuPay debit card. What's more, Prime Minis ter Narendra Modi has announced . 30,000 life insurance cover on accounts ` opened before January 26 next year. The government has told banks to open 7.5 crore financial inclusion accounts in the next five months.
Bankers aren't sure whether existing account holders would get ` . 1 lakh acci dental insurance cover. It's also not clear as to who is going to foot the bills for the insurance premium and other costs to keep accounts running. “The government needs to spell out clearly who are the targeted people for this scheme,“ said HK Pradhan, professor of finance and economics at XLRI, Jamshedpur. “If banks try to merely achieve the target without proper screening, the entire purpose of the new drive will be defeated.“
The government appears to be in the process of developing an integrated portal for household information based on the 2011 census. Sources close to the development said the information would be reconciled with the district-level database and banks' existing deposit account holders. This integrated database will provide information on the progress of financial inclusion and build credit information.
According to minority affairs minister Najma Heptulla, about 42% or 10 crore households out of 24.64 crore don't have access to banking facilities. About 45% of 16.76 crore rural households and 33% of 7.88 crore urban households don't have bank accounts. The accounts will allow easier transfer of benefits. “We disburse 90 lakh scholarship schemes for minority communities across the country. With this facility, we will be able to transfer the money with transparency,“ Heptulla said.
The programme is a critical part of the fight against poverty, Prime Minister Modi said at the inaugural function in New Delhi. “Crores of Indians are still outside the ambit of organised financial system even after 45 years of bank nationalisation. I call it financial untouchability. Gandhiji ended social untouchability, it is our mission to eradicate this kind of untouchability to eradicate poverty,“ he said.
XLRI's Pradhan has recently launched Sanchetana, a financial literacy initiative. He welcomed the aims of the programme. “When every household gains access to banking, receives cash transfers under several welfare programmes and benefits from a range of financial products, they will be able to come out of the grip of moneylenders,“ he said.
The programme is aimed at making financial services available to every household instead of taking a villagebased approach followed by the previous Manmohan Singh-led United Progressive Alliance government. Some senior bankers estimate those who already have accounts at 15-20% of the total. “At present, we are opening new accounts under the Jan Dhan scheme for everyone who is coming to us. The screening will be done later,“ United Bank of India executive director Deepak Narang told ET.“A survey has to be done at the rural level to identify the finan cially excluded pop ulation.“
State Bank of India deputy managing director Sunil Sri vastava said there could be some dupli cation of financial inclusion accounts, but it would be diffi cult to put a number to it. “Even if there is 5-10% repetition, still 90% people have ounts. This is going to received new accounts. This is going to be a game-changer,“ Srivastava said.
The accounts come bundled with ` .1 lakh accidental insurance cover, a . 5,000 overdraft (after six months of op` eration), a micro-pension and a RuPay debit card. What's more, Prime Minis ter Narendra Modi has announced . 30,000 life insurance cover on accounts ` opened before January 26 next year. The government has told banks to open 7.5 crore financial inclusion accounts in the next five months.
Bankers aren't sure whether existing account holders would get ` . 1 lakh acci dental insurance cover. It's also not clear as to who is going to foot the bills for the insurance premium and other costs to keep accounts running. “The government needs to spell out clearly who are the targeted people for this scheme,“ said HK Pradhan, professor of finance and economics at XLRI, Jamshedpur. “If banks try to merely achieve the target without proper screening, the entire purpose of the new drive will be defeated.“
The government appears to be in the process of developing an integrated portal for household information based on the 2011 census. Sources close to the development said the information would be reconciled with the district-level database and banks' existing deposit account holders. This integrated database will provide information on the progress of financial inclusion and build credit information.
According to minority affairs minister Najma Heptulla, about 42% or 10 crore households out of 24.64 crore don't have access to banking facilities. About 45% of 16.76 crore rural households and 33% of 7.88 crore urban households don't have bank accounts. The accounts will allow easier transfer of benefits. “We disburse 90 lakh scholarship schemes for minority communities across the country. With this facility, we will be able to transfer the money with transparency,“ Heptulla said.
The programme is a critical part of the fight against poverty, Prime Minister Modi said at the inaugural function in New Delhi. “Crores of Indians are still outside the ambit of organised financial system even after 45 years of bank nationalisation. I call it financial untouchability. Gandhiji ended social untouchability, it is our mission to eradicate this kind of untouchability to eradicate poverty,“ he said.
XLRI's Pradhan has recently launched Sanchetana, a financial literacy initiative. He welcomed the aims of the programme. “When every household gains access to banking, receives cash transfers under several welfare programmes and benefits from a range of financial products, they will be able to come out of the grip of moneylenders,“ he said.
