Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy

Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
Pradhan Mantri
                                    Jan-Dhan Yojana

                                   A National Mission on Financial Inclusion

Department of Financial Services              Department of Financial Services
      Ministry of Finance                           Ministry of Finance
      Government of India                           Government of India        
Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
" Economic resources of the country should be
    utilised for the well-being of the poor.
 The change will commence from this point."

                           Shri Narendra Modi
                           Hon’ble Prime Minister of India
Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
Message                                                  Message
                  I am happy to launch this booklet on the                 I am glad that we have undertaken the
                  Pradhan Mantri Jan-Dhan Yojana.                          Pradhan Mantri Jan-Dhan Yojana as a National

                  Inclusive Growth – “Sab Ka Sath Sab Ka Vikas”            Mission on Financial Inclusion to provide all

                  is central to our development philosophy. This           households in the country with financial services,

                  Mission would enable all households, urban and           with particular focus to empower the weaker

                  rural to gain easy and universal access to financial     sections of society, including women, small

                  services. Exclusion from the banking system              and marginal farmers and labourers, both rural

                  excludes people from all benefits that come from a       and urban.

                  modern financial system. In this Mission, households     The necessity of launching such a mission was felt in
                  will not only have bank accounts with indigenous         view of the fact that less than two-thirds of the
                  RuPay Debit cards but will also gain access to credit    households in the country have access to banking
                  for economic activity and to insurance and pension       facilities even after 67 years of independence.
                  services for their social security. I am happy to note   The Mission seeks to provide all households in the
                  that the Mission has a strong focus on the use of        country, both rural and urban, with access to the
                  technology and incorporates lessons learnt from          financial services, like bank account with RuPay
                  earlier efforts.                                         Debit card, access to credit, remittance, Insurance

                  I congratulate the Finance Minister and his team         & Pension. Thus, the Mission not only brings the

                  for their excellent effort in undertaking this           excluded sections into the financial mainstream but

                  ambitious task.                                          makes the transfer of benefits of various subsidy
                                                                           schemes of the government more efficient.
                  I wish them all the success.
                                                                           To achieve the objectives of the Mission we would
                                                                           require full support from Banking and other Financial
                                                                           Institutions, private service providers and above all,
                                                                           citizens. I am sure together we shall succeed in
22 August, 2014   Shri Narendra Modi
                                                                           improving the financial status of the downtrodden
                  Hon’ble Prime Minister of India
                                                                           and poor of our country.

                                                                           Shri Arun Jaitley
                                                                           Minister of Finance, Corporate Affairs and Defence
Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
Message                                                     Foreword
It gives me immense pleasure to be an active part of        Financial Inclusion is a national priority of the Government as it is an enabler
the Government's initiative of the Pradhan Mantri           for inclusive growth. Financial Inclusion is important as it provides an avenue
Jan-Dhan Yojana which is a National Mission on              to the poor for bringing their savings into the formal financial system, an
Financial inclusion by the Hon'ble Prime Minister.          avenue to remit money to their families in villages besides taking them out of
                                                            the clutches of the usurious money lenders. The efforts to include the
Financial Inclusion is an important priority of the
                                                            financially excluded segments of the society in India are not new. In the
Government as it is an enabler for inclusive growth.
                                                            campaign launched in the year 2011 by Government of India, about 74,000
The main objective of the Yojana is to ensure               villages with population more than 2,000 (as per 2001 census) were covered
universal access to banking facilities with at least one    with banking facilities.
basic banking account for every household.
                                                            The earlier campaign however was limited in its approach in terms of reach
It is my firm belief that inclusive growth is crucial for   and coverage. Convergence of various aspects of comprehensive Financial
achieving sustainable economic development. I am            Inclusion like opening of bank accounts, access to digital money, availing of
sure the Pradhan Mantri Jan-Dhan Yojana will go a           micro credit, insurance and pension was lacking. The campaign focused only
long way in achieving the goal of complete financial        on the supply side by providing banking facility in villages of population
inclusion across the country.                               greater than 2000 but the entire geography was not targeted. There was
I am confident that we shall succeed in this                no focus on the households. Also some technology issues hampered further
endeavour.                                                  scalability of the campaign. Consequently the desired benefits could not be
                                                            achieved and a large number of bank accounts remained dormant.
                                                            A comprehensive plan is necessary to keep the accounts active and use them
                                                            as an instrument of some economic activity leading to livelihoods.

                                                            In order to provide the much needed thrust a flagship programme called the
                                                            'Pradhan Mantri Jan-Dhan Yojana' was announced by Hon'ble Prime
Smt. Nirmala Sitharaman,                                    Minister in his Independence Day address on 15th August, 2014. This is a
MoS (IC) for Commerce & Industry                            National Mission on Financial Inclusion encompassing an integrated
and MoS for Finance & Corporate Affairs                     approach to bring about comprehensive financial inclusion of all the
                                                            households in the country. The plan envisages universal access to banking
                                                            facilities with at least one basic banking account for every household,
                                                            financial literacy, access to credit, insurance and pension facility. In addition,
                                                            the beneficiaries would get RuPay Debit card having inbuilt accident
                                                            insurance cover of `1 lakh. The plan also envisages channeling all
                                                            Government benefits (from Centre / State / Local Body) to the beneficiaries
                                                            accounts and pushing the Direct Benefits Transfer (DBT) scheme of the
                                                            Union Government. The technological issues like poor connectivity, on-line
                                                            transactions will be addressed. Mobile transactions through telecom
Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
operators and their established centres as Cash Out Points are also planned
to be used for Financial Inclusion under the Scheme. Also an effort is being
made to reach out to the youth of this country to participate in this Mission
Mode Programme.

We are extremely grateful to Hon'ble Prime Minister who not only provided
his strong support to the scheme but guided us extensively in re-framing it
and making it more meaningful and all inclusive. I am also thankful to Hon'ble
Finance Minister for his continued guidance and support in drafting of the
scheme. Our thanks are due to Hon'ble Minister of State for Finance who
took an active interest in the finalization of the scheme and helped us on
several issues particularly in soliciting support of the States. I would like to
express our appreciation to the Ministry of Rural Development, Ministry of
Communications and Information Technology, Ministry of Information and
Broadcasting, Department of Posts, Ministry of Labour and other Ministries
and Organizations for providing their active support in this initiative. I must
place on record my deep appreciation to Reserve Bank of India, Indian Banks'
Association (IBA) and various Banks / State Level Bankers Committees and
the Insurance Companies for their whole-hearted contribution in the
formulation of the scheme. Our thanks are due to the States and Union
Territories for committing their full support in the implementation of the
scheme. Last but not the least I must thank all concerned officers
of Department of Financial Services who worked tirelessly to put in place a
new programme meeting the expectations of the new Government. An
important feature of the present plan is that it will be implemented in Mission
Mode. A web based monitoring tool for the Mission has been developed.

I would also like to express my thanks to all members of the public and
various organizations bodies who provided their valuable inputs and
suggestions. The name of the Scheme, the logo design and the tagline are
based on suggestions received through crowd sourcing. With the support of
all stakeholders, I am sure we will make the scheme a grand success fulfilling
the national aspirations for an economically strong and vibrant country.

                                                    Dr. Gurdial Singh Sandhu
                                                 Department of Financial Services
                                                       Ministry of Finance
                                                      Government of India
Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
S.No   Content                                             Pages       S.No   Content                                                      Pages
       Executive Summary                                  (i) to (v)   8.     Role of Technology in Financial Inclusion                     28

1.     Introduction                                           1        9.     Administrative Structure for Monitoring                       34

2.     Financial Inclusion – Background                       4        10.    Monitoring Mechanism/MIS                                      36

3.     Financial Inclusion: Current Status – India            6        11.    Media and Publicity                                           38

4.     Mission Mode Objectives (6 Pillars)                   10        12.    Challenges identified in the implementation of the Mission    40

5.     Timeline for Financial Inclusion Plan                 12        13.    Roles of major stakeholders                                   42

6.     Strategy for achievement of Objectives                14        14.    Launch Function                                               46

7.     Implementation of PMJDY in Mission Mode                         15.    Timelines for Implementation                                  47

       7.1 Reaching out – Network expansion and
           geographical coverage of the banks                17

       7.2 Opening of Basic Saving Bank Account of
           every adult citizen                               20

       7.3 Financial Literacy and Credit Counselling (FLCC) -
           Establishing adequate number of Financial Literacy
           Centres (FLC) & Mechanism to increase financial
           literacy among the financially excluded sections   23

       7.4 Credit Guarantee Fund                             24

       7.5 Micro-Insurance                                   25

       7.6 Unorganized sector Pension scheme
           - Swavalamban                                     26
Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
BCs are not actually functional.                  estimated at 2.55 crore as per Census,
                                                                                                          •   Public Sector Banks (PSBs) including              2011. However, the exact number of
    EXECUTIVE SUMMARY                                                                                         RRBs have estimated that by 31.05.2014,
                                                                                                              out of the 13.14 crore rural households
                                                                                                                                                                households without bank accounts are
                                                                                                                                                                not available but estimated to be 1.5 crore
                                                                                                              which were allocated to them for                  implying opening of about 1.5 crore
                                                                                                              coverage, about 7.22 crore households             accounts in urban areas.
                                                                                                              have been covered (5.94 crore                 3. Present plan:
    1. Current status of financial                          sector, decided in public interest to             uncovered). It is estimated that 6 Crore
       inclusion in the country:                            enable the banks to use the services of                                                             Comprehensive FI based on six pillars is
                                                                                                              households in rural and 1.5 Crore in              proposed to be achieved as under:
                                                            NGOs/SHGs, MFIs and other Civil                   urban area needs to be covered.
    •   In order to ensure financial inclusion              Society Organizations as intermediaries
        various initiatives were taken up by RBI/ GoI                                                                                                       Phase I (15th Aug, 2014 - 14th Aug, 2015)
                                                            in providing financial and banking services   2. The task at hand:
        like Nationalization of Banks, Expansion            through use of "Business Facilitator and                                                        •   Universal access to banking facilities
        of Banks branch network, Establishment                                                            •   To provide Bank Account to every
                                                            Business Correspondent Model".                    household in the country and make             •   Providing Basic Banking Accounts for
        & expansion of Cooperative and RRBs,
                                                        •   Census 2011 estimated that out of 24.67           available the basic banking services              saving & remittance and RuPay Debit card
        Introduction of PS lending, Lead Bank
                                                            crore households in the country, 14.48            facilities i.e. (i) Opening of Bank Account       with inbuilt accident insurance cover of
        Scheme, Formation of SHGs and State
                                                            crore (58.7%) households had access to            with RuPay Debit Card & Mobile Banking            ` 1 lakh and RuPay Card
        specific approach for Govt. sponsored
        schemes to be evolved by SLBC etc.                  banking services. Of the 16.78 crore rural        facility, (ii) Cash Withdrawal & Deposits,    •   Financial Literacy Programme
                                                            households, 9.14 crore (54.46%) were              (iii) Transfer, (iv) Balance Enquiry & (v)
    •   RBI vide Mid-term Review of Annual                                                                    Mini Statement. Other services are also       Phase II (15th Aug, 2015 - 15th Aug, 2018)
                                                            availing banking services. Of the 7.89
        Policy Statement for the year 2005-2006,            crore urban households, 5.34 crore                to be provided in due course in a time        •   Overdraft facility of upto ` 5000/- after
        advised Banks to align their policies with          (67.68%) households were availing                 bound manner apart from financial                 six months of satisfactory performance of
        the objective of financial inclusion. Banks         banking services.                                 literacy which is to be disseminated side         saving / credit history.
        were advised to make available a basic                                                                by side to make citizens capable to use
        banking 'No frills' account either with 'nil'   •   In the year 2011, Banks covered 74,351                                                          •   Creation of Credit Guarantee Fund for
                                                                                                              optimum utilization of available financial
        or very minimum balances as well as                 villages, with population more than 2,000                                                           coverage of defaults in overdraft A/Cs
                                                                                                              services. To provide these banking
        charges that would make such accounts               (as per 2001 census), with banking                services banking outlets to be provided       •   Micro-Insurance
        accessible to vast sections of population.          facilities under the "Swabhimaan"                 within 5 KM distance of every village.
                                                            campaign with Business Correspondents                                                           •   Unorganized sector Pension schemes like
        Besides, it has been emphasized upon by                                                               Necessary infrastructure also needs to be
                                                            as explained later. However the                                                                     Swavalamban
        the RBI for deepening and widening the                                                                placed to enable e-KYC for account
        reach of Financial Services so as to cover a        programme had a very limited reach                opening and AEPS for withdrawal of cash           In addition, in this phase, coverage of
        large segment of the rural & poor sections          and impact.                                       based biometric authentication from               households in hilly, tribal and difficult
        of population.                                  •   The present banking network of the                UIDAI data base.                                  areas would be carried out. Moreover,
                                                            country (as on 31.03.2014) comprises of                                                             this phase would focus on coverage of
    •   RBI in the year 2006, with the objective of                                                       •   Putting the PSBs and RRBs numbers
                                                            a bank branch network of 1,15,082 and an                                                            remaining adults in the households and
        ensuring greater financial inclusion and                                                              together implies that about 5.92 crore
                                                            ATM network of 1,60,055. Of these,                                                                  students.
        increasing the outreach of the banking                                                                rural households are yet to be covered.
                                                            43,962 branches (38.2%) and 23,334                Considering field level data mismatches in    •   All the rural & semi-urban areas of the
                                                            ATMs (14.58%) are in rural areas.                 some instances, it is estimated that there        country are proposed to be mapped into
                                                            Moreover, there are more than 1.4 lakh            are about 6 crore uncovered households            Sub Service Area (SSAs) comprising
                                                            Business Correspondents (BCs) of Public           which would need to be covered in the             1000-1500 households with an average
                                                            Sector Banks and Regional Rural Banks in          rural areas.                                      3-4 villages with relaxation in NE/Hilly
                                                            the rural areas. BCs are representatives                                                            states.
                                                            of bank to provide basic banking services     •   Assuming a minimum of one account per
                                                                                                              family, this translates into opening of 6     •   It is also proposed that looking to the
                                                            i.e. opening of basic Bank accounts, Cash
                                                                                                              crore accounts in villages.                       viability of each center around 74000
                                                            deposits, Cash withdrawals, transfer of
                                                                                                                                                                villages with population more than 2000
                                                            funds, balance enquiries, mini statements     •   In addition account opening of uncovered          which were covered by Business
                                                            etc. However actual field level                   households in urban areas would also be           Correspondents under Swabhimaan
                                                            experience suggests that many of these            required. These households are                    Campaign will be considered for

i                                                                                                                                                                                                             ii
Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
conversion into full fledged Brick &             infrastructure as well as expand the same       beneficiaries to such accounts and                  other Departments of the Central
          Mortar branches with staff strength of           to cover all households. While the              pushing the Direct Benefits Transfer                Government, State Governments, RBI,
          1+1 / 1+2 in the next three to five years.       existing banking network would be fully         (DBT) scheme of the Union Government                NABARD, NPCI, UIDAI and others have
      •   All the 6 lakh villages across the entire        geared up to open bank accounts of the          including restarting the DBT in LPG                 been indicated.
          country are to be mapped according to            uncovered households in both rural and          scheme. MGNREGS sponsored by                    •   Gram Dak Sewaks in rural areas are
          the Service Area of each Bank to have at         urban areas, the banking sector would           Ministry of Rural Development (MoRD,                proposed as Business Correspondent of
          least one fixed point Banking outlet             also be expanding itself to set up an           GoI) is also likely to be included in Direct        Banks.
          catering to 1000 to 1500 households,             additional 50,000 Business Correspondents       Benefit Transfer scheme.
                                                           (BCs), more than 7,000 branches and                                                             •   Department of Telecom has been
          called as Sub Service Area (SSA). It is                                                      •   Keeping the stiff targets in mind, in the           requested to ensure that problems of
          proposed that SSAs shall be covered              more than 20,000 new ATMs in the first          first phase, the plan would focus on first
                                                           phase .                                                                                             poor and no connectivity are resolved.
          through a combination of banking outlets                                                         three pillars in the first year starting from       They have informed that out of the 5.93
          i.e. branch banking and branch less          •   The comprehensive plan is necessary             15th August, 2014.                                  lakh inhabited villages in the country
          banking. Branch banking means                    considering the learnings from the past     •   The target for setting up additional                (2011 census) about 50,000 villages are
          traditional Brick & Mortar branches.             where a large number of accounts                50,000 BCs is quite challenging given the           not covered with Telecom connectivity.
          Branchless banking comprises of fixed            opened remained dormant, resulting in           constraints of telecom connectivity.
          point Business Correspondents agents,            costs incurred for banks and no benefits                                                        •   In the recent past there is substantial
          who act as representative of Bank to             to the beneficiaries.                       •   In order to achieve this plan, phase wise           improvement on Technological front
          provide basic banking services.                                                                  and state wise targets for Banks have               after adoption of CBS by Banks like
                                                       •   The plan therefore proposes to channel          been set up for Banks for the period                electronic payment, NEFT, RTGS, mobile
      •   The implementation strategy of the plan          all Government benefits (from
                                                                                                           15th August, 2014 to 14th August, 2015.             banking, internet, IMPS etc. After arrival
          is to utilize the existing banking               Centre/State/Local body) to the                                                                     of Aadhaar, Aadhaar enabled products
                                                                                                       •   In order to achieve a "demand" side pull
                                                                                                                                                               like e-KYC for opening of accounts,
                                                                                                           effect, it would be essential that there is
                                                                                                                                                               Aadhaar Enabled Payment System
                                                                                                           Branding and awareness of Business
                                                                                                                                                               (AEPS), Micro-ATMs, ABPS for Aadhaar
                                                                                                           Correspondent model for providing basic
                                                                                                                                                               based centralised credit based on
                                                                                                           banking services, Banking Products
                                                                                                                                                               biometric authentication of customer
                                                                                                           available at BC outlets and RuPay Cards. A
                                                                                                                                                               from UIDAI data base. Similarly, NPCI has
                                                                                                           media plan for the same is being worked
                                                                                                                                                               launched new products like USSD based
                                                                                                           out in consultation with banks.
                                                                                                                                                               mobile banking, IMPS etc. which have
                                                                                                       •   A Project Management Consultant /                   potential to change the entire landscape
                                                                                                           Group would be engaged to help the                  of Financial Inclusion. There would be
                                                                                                           Department implement the plan.                      focus to use these products in a large way
                                                                                                       •   It is proposed to launch the programme              to ensure coverage of hitherto excluded
                                                                                                           simultaneously at National level in Delhi,          section in a time bound manner.
                                                                                                           at every State capital and all district         •   In the present plan, based on the learning
                                                                                                           headquarters.                                       of the past, a holistic approach is
                                                                                                       •   A web-portal would be created for                   proposed to provide all the citizens of the
                                                                                                           reporting/monitoring of progress.                   country with a basket of financial
                                                                                                                                                               products to enable them financially
                                                                                                       •   Roles of various stakeholders like                  secure. An illustration showing shift in
                                                                                                                                                               approach is appended hereunder:

iii                                                                                                                                                                                                          iv
Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
Learning from the past Campaign and Shift in approach
    S.No.   Earlier Approach (Swabhimaan)                     New Approach (PMJDY)

    1.      Villages with population greater than 2000        Focus on household; Sub Service Area (SSA) for
            covered; thus limited geographical coverage       coverage of the whole country.

    2.      Only rural                                        Both rural and urban

    3.      Bank Mitr (Business Correspondent) was visiting   Fixed point Bank Mitr (Business Correspondent)
            on fixed days only                                in each SSA comprising of 1000-1500 households
                                                              (3 to 4 villages on an average) to visit other
                                                              villages in the SSA on fixed days

    4.      Offline accounts opening - Technology lock-in     Only online accounts in CBS of the Bank
            with the vendor

    5.      Focus on account opening and large number of      Account opening to be integrated with DBT,
            accounts remained dormant                         credit, insurance and pension

    6.      Inter-operability of accounts was not there       Inter-operability through RuPay Debit Card, AEPS etc.

    7.      No use of Mobile Banking                          Mobile wallet and USSD based mobile banking to
                                                              be utilized

    8.      Cumbersome KYC formalities                        Simplified KYC/e-KYC in place as per RBI

    9.      No guidelines on the remuneration of the Bank     Minimum remuneration of the Bank Mitr
            Mitr (Business Correspondent). Banks went         (Business Correspondent) to be ` 5000/-( Fixed
            generally with Corporate BCs who used to be       + Variable)
            least expensive to them

    10.     A recent RBI survey finds that 47% of Bank Mitr   Viability and sustainability of Bank Mitr (Business
            are untraceable                                   Correspondent) is identified as a critical

    11.     Monitoring left to banks                          Financial Inclusion campaign in Mission Mode
                                                              with structured monitoring mechanism at
                                                              Centre, State and District level

    12.     Financial literacy had no focus                   The rural branches of banks to have a dedicated
                                                              Financial Literacy Cell

    13.     No active involvement of states / districts       State level & District level monitoring
                                                              committees to be set up

    14.     No brand visibility of the Programme & Bank       Brand visibility for the programme & Bank Mitr
            Mitr (Business Correspondent)                     (Business Correspondent) proposed

    15.     Providing credit facilities was not encouraged    OD limit after satisfactory operations / credit
                                                              history of 6 months

    16.     No grievance redressal mechanism                  Grievance redressal at SLBC level in respective

Pradhan Mantri Jan-Dhan Yojana - A National Mission on Financial Inclusion - pmjdy
Hon'ble Prime Minister, Sh. Narendra Modi           inclusion under the chairmanship of
                                                                         on 15th August, 2014 announced "Pradhan             Dr. C. Rangarajan. The committee finalized
                                                                         Mantri Jan-Dhan Yojana (PMJDY)" which               its report in early 2008. As is evident from
                                                                         is a National Mission for Financial                 the preamble of the report, the committee
                                                                         Inclusion.The task is gigantic and is a National    interpreted financial inclusion as an
                                                                         Priority.                                           instrumentality for social transformation.
                                                                                                                             "Access to finance by the poor and
                                                                         This National Mission on Financial Inclusion
                                                                                                                             vulnerable groups is a prerequisite for
                                                                         has an ambitious objective of covering all
                                                                                                                             inclusive growth. In fact, providing access
                                                                         households in the country with banking
                                                                                                                             to finance is a form of empowerment of the
                                                                         facilities and having a bank account for each
                                                                                                                             vulnerable groups. Financial Inclusion
                                                                         household. It has been emphasised by the
                                                                                                                             denotes delivery of financial services at an
                                                                         Hon'ble PM that this is important for including
                                                                                                                             affordable cost to the vast sections of the
                                                                         people left-out into the mainstream of the
                                                                                                                             disadvantaged and low-income groups.
                                                                         financial system.
                                                                                                                             The various financial services included
                                                                         The Pradhan Mantri Jan-Dhan Yojana will be          credit, savings, insurance and payments
                                                                         launched on 28th August, 2014, across the           and remittance facilities. The objective of
                    INTRODUCTION                                         nation simultaneously. It will be launched          financial inclusion is to extend the scope of
                                                                         formally in Delhi with parallel functions at the    activities of the organized financial system
                                                                         state level and also at district and sub-district   to include within its ambit people with low
    Objective of "Pradhan Mantri Jan-Dhan Yojana (PMJDY)"                levels. Camps are also to be organized at the       incomes. Through graduated credit, the
    is ensuring access to various financial services like availability   branch level. The Pradhan Mantri Jan-Dhan           attempt must be to lift the poor from one
                                                                         Yojana lies at the core of development              level to another so that they come out of
     of basic savings bank account, access to need based credit,
                                                                         philosophy of "Sab Ka Sath Sab Ka Vikas".           poverty."
     remittances facility, insurance and pension to the excluded
         sections i.e. weaker sections & low income groups.              With a bank account, every household would          It is a known fact that in India, while one
                                                                                                                             segment of the population has access to
    This deep penetration at affordable cost is possible only with       gain access to banking and credit facilities.
                                                                         This will enable them to come out of the grip       assortment of banking services
                       effective use of technology.
                                                                         of moneylenders, manage to keep away from           encompassing regular banking facilities &
                                                                         financial crises caused by emergent needs,          portfolio counselling, the other segment of
                                                                         and most importantly, benefit from a range of       underprivileged and lower income group is
                                                                         financial products. As a first step, every          totally deprived of even basic financial
                                                                         account holder gets a RuPay debit card with a       services. Exclusion of large segments of the
                                                                         ` 1,00,000/- accident cover. Further, they will     society from financial services affects the
                                                                         be covered by insurance and pension                 overall economic growth of a country. It is
                                                                         products. There is need to enroll over 7.5          for this reason that Financial Inclusion is a
                                                                         crore households and open their accounts.           global concern. In Sweden and France,
                                                                                                                             banks are legally bound to open an account
                                                                         Earlier efforts by the Government of India
                                                                                                                             for anybody who approaches them. In
                                                                         includes setting up a committee on financial
                                                                                                                             Canada, law requires Banks to provide

1                                                                                                                                                                            2
accounts without minimum balance to all        India has several strategic assets providing
    Canadians regardless of employment /           favourable initial conditions for transformational
    credit history. In the United States, the      change towards digital financial inclusion:
    Community Reinvestment Act (1977) is
                                                   • A strong banking network (1,15,000
    intended to encourage depository
                                                       branches) linked to eKuber (RBI's Core
    institutions to help meet the credit needs
                                                       Banking Solution), now spreading into
    of the communities in which they operate,
                                                       unbanked rural areas.
    including low and moderate income
    neighbourhoods, consistent with safe and       • A significant outreach of India Post
    sound operations.                                  (1,55,000 outlets), PoS and ATM
                                                       terminals which can facilitate a vibrant
    In India, the Banking industry has grown
                                                       cash-in/cash-out network across the
    both horizontally and vertically but the
    branch penetration in rural areas has not
    kept pace with the rising demand and the
    need for accessible financial services. Even
                                                   • A nation-wide telecom network with
                                                       886 million mobile connections and
                                                                                                        FINANCIAL INCLUSION
    after decades of bank nationalization,
    whose rationale was to shift the focus from
                                                       72% mobile penetration.
                                                   • Strong Network of computer
    class banking to mass banking, we still find
                                                       based service providers in the form
    usurious money lenders in rural areas and
                                                       of Common Service Centres (CSC)
    urban slums continuing to exploit the poor.
                                                       promoted by Deptt of IT.
    After economic reforms of 1991, the
    country can ill-afford not to include the      • A strong national payments infrastructure
    poor in the growth paradigm. Financial             that includes an Inter- Mobile Payments
    Inclusion of the poor will help in bringing        Service / Immediate Payment System
    them to the mainstream of growth and               (IMPS) to transfer funds over mobile
    would also provide the Financial                   phones.
    Institutions an opportunity to be partners
    in inclusive growth.                           • A world class national ID system
                                                       covering the largest (650M) headcount
    Experiences in India and abroad has shown          and expanding by 30M citizens per month.
    that traditional Banks have struggled to
    reach the poor with financial services.
    Recognizing this fact, many countries such
    as Brazil, Indonesia, Malaysia, Mexico etc.
    have allowed non-banks to offer payments,
    deposits and cash-in/cash-out services.
    Similarly, in India, enabling an inclusive
    competitive landscape should be a top

2. Financial Inclusion - Background:            Consequently the desired benefits were
                                                    not visible. Learning from the past, the
    The efforts to include the financially          present proposal is, therefore, an
    excluded segments of the society into           integrated approach to bring about
    formal financial system in India are not new.   comprehensive financial inclusion.
    The concept was first mooted by the
    Reserve Bank of India in 2005 and               The learnings from the previous campaign
    Branchless Banking through Banking              and proposed approach under the
    Agents called Bank Mitr (Business               comprehensive FI plan in mission mode is
    Correspondent) was started in the year          appended with Executive Summary.
    2006. In the year 2011, the Government of       At present only 0.46 lakh villages out of the
    India gave a serious push to the programme      5.92 lakh villages in the country have bank
    by undertaking the "Swabhimaan"                 branches. In order to cover the remaining
    campaign to cover over 74,000 villages,         areas with the banking outlets, a composite
    with population more than 2,000 (as per         approach is proposed through branch and
    2001 census), with banking facilities. State-   branchless banking. Strategy for branchless
    wise number of villages covered under the       banking is through online fixed points Bank
    campaign may be seen in Annexure-1.             Mitr (Business Correspondent) who act as
    Learnings from the campaign suggest
                                                    representatives of Banks to provide basic
                                                    banking services. Mobile banking facility
                                                                                                     FINANCIAL INCLUSION
    • The efforts need to be converged so as
      to cover the various aspects of PMJDY,
                                                    with USSD based technology is also
                                                    proposed to be provided to every account        CURRENT STATUS - INDIA
                                                    holders with low end mobile phones.
      like availing of Micro Credit, Insurance      Mobile wallets would also be effectively
      & Pension.                                    utilised to deepen Financial Inclusion.
    • The campaign focussed only on the
      supply side by providing banking outlets
      in villages of population greater than
      2000, but the entire geography could
      not be covered.
    • The target was for coverage of villages
      and not of the households.
    • The remuneration of the Bank Mitr
      (Business Correspondent) was very
    • Dependability and trust factor with a
      mobile BC was not high. Most of the
      BCs operated off-line which locked a
      customer with a particular BC thereby
      constraining the utility.
    • Some technology issues hampered
      further scalability of the campaign.
    • The deposit accounts so opened under
      the campaign had very limited number
      of, or no transactions.
    • The task of credit counselling and
      Financial Literacy did not go hand in
      hand with the campaign.

3. Financial Inclusion: Current Status - India                      India is still home of 1/3rd of world's poor.                                       b. The statistics show that there is substantial          BCs to incentivize them.
    •   Despite various measures for financial                  •       Census, 2011 estimates that only 58.7%                                                 progress towards opening of accounts,              •   2010: In June the RBI and TRAI were able
        inclusion, poverty and exclusion continue                       of the households have access to banking                                               providing basic banking services during the            to reach an initial agreement regarding the
        to dominate socio-economic and political                        services                                                                               recent years as indicated above. However,              rollout of mobile banking, whereby TRAI
        discourse in India even after six decades                                                                                                              it is essential that all the sections be               would deal with all interconnection issues
                                                                •       The present banking network of the                                                     financially included in order to have
        of post economic independence era.                              country (as on 31.03.2014) comprises of                                                                                                       and RBI would handle the banking aspects
        Though economy has shown impressive                                                                                                                    financial stability and sustainability of the          such as KYC checks, transaction limits etc.
                                                                        a bank branch network of 1,15,082 and an                                               economic and social order.
        growth during post liberalization era of                        ATM network of 1,60,055. Of these,                                                                                                        •   2010: In September, all companies listed
        1991, impact is yet to percolate to all                         43,962 branches (38.2%) and 23,334                                                  c. According to World Bank Findex Survey                  under the Companies Act (1956) were
        sections of the society and therefore,                                                                                                                 (2012) (
                                                                        ATMs (14.58%) are in rural areas1 .                                                                                                           allowed to act as BCs, with the exception
                                                                                                                                                               external/default/WDSContentServer/IW3                  of non-bank financial companies.
                                          Availability of Banking Services
                                                                                                                                                               83611/Rendered/PDF/WPS6025.pdf),                   •   2010: The same directive determined that the
                                                                                                        Census 2001                Census 2011
                   80                                                                                                                                          only 35% of Indian adults had access to a              distance rule was open to and optional
                                                                        67.8                                                                                   formal bank account and 8% borrowed                    relaxation in certain cases, based on the
                                                                                                                               58.7                            from a formal financial institution in last 12         decision of the State Level Bankers'
                   60              54.4                                                                                                                                                                               Committees.
                                                                                                                                                               months. The miniscule number suggests an
                   50                                                                                                                                          urgent need to further push the financial          •   However, document verification falls

                   40                                                                                            35.5                                          inclusion agenda to ensure that people at              under the domain of the banks, to ensure
                        30.1                                                                                                                                   the bottom of the pyramid join the                     adherence to KYC norms. This does slow
                                                                                                                                                               mainstream of the formal financial system.             down the account opening process.
                                                                                                                                                            •   Recent Important Guidelines on                    •   2011: In January, TRAI announced its intent
                   10                                                                                                                                           Financial Inclusion:                                  to fix mobile tariffs for financial services as
                   0                                                                                                                                        •   2006: In January, banks were allowed to               against their current market pricing, with a
                           Rural                                Urban                                                  Total
                                                                                                                                                                enlist non-profit Bank Mitr (Business                 view to ensuring affordability.
                                                                                                                                                                Correspondent) as agents for delivery of          •   2011: RBI issued guidelines for opening
    a. Financial Inclusion - Summary progress of all Banks including Regional Rural                                                                             financial services, acting in the capacity of         Aadhaar Enabled Bank Accounts to
       Banks (RRBs), during five years period are as under:                                                                                                     'last-mile infrastructure'.                           facilitate routing of MGNREGA wages and
                                                                                                                                                            •   2008: In April, it was determined that BCs            other social benefits in to the accounts
                                                                                                                                                                should be located not more than 15                    using EBT.
                                                                                                                                                                kilometres from the nearest bank branch,          •   2012: RBI permitted Aadhaar letter as a
                                                                                                                                                                so as to ensure their adequate supervision.           proof of both Identity & Address for the
                                                                                                                                                                This was a very restrictive rule that                 purpose of opening of bank Accounts
                                                                                                                                                                severely limited the expansion of this
                                                                                                                                                                model.                                            •   2012: GoI introduced Sub Service Area
                                                                                                                                                                                                                      (SSA) approach for opening of banking
                                                                                                                                                            •   2008: The RBI issued operative guidelines             outlet and for Direct Cash Transfer.
                                                                                                                                                                for mobile banking and amended the same
                                                                                                                                                                in December 2009 to ease the various              •   2012: Aadhaar Payment Bridge System
                                                                                                                                                                transaction limits and security norms.                (APBS) was introduced for centralised
                                                                                                                                                                                                                      credit of Social Benefits.
                                                                                                                                                            •   2009: Individual for profits were allowed to
                                                                                                                                                                participate as BCs, and this category included    •   Guidelines on Direct Benefit Transfer
                                                                                                                                                                kirana store , gas stations, PCOs etc. Further,       issued by GoI.
                                                                                                                                                                BCs were allowed to operate up to 30              •   2013: To ease the account opening process
                                                                                                                                                                kilometres from the nearest bank branches.            RBI permitted to use e-KYC.
                                                                                                                                                            •   2009: Banks were allowed to apply                 •   TRAI issued guidelines on USSD based
                                                                                                                                                                'reasonable' service charges from customers           mobile banking services for FI.
                                                                                                                                                                to ensure viability of the BC model, and to       •   2014: RBI issues guidelines for scaling up of
                                                        Source RBI. "Rural" areas are defined as those centres which have population of less than 10,000.
                                                                   USSD- Unstructured Supplementary Service Data proposed to be launched by NPCI                pay a 'reasonable' commission/fee to the              Business Correspondent model.
                                                                                                                  One BC can cover more than one village

7                                                                                                                                                                                                                                                                       8
      (6 PILLARS)

4. Mission Mode Objectives                              opening basic bank accounts. Account holder
                                                                would be provided a RuPay Debit Card.
     (6 Pillars):                                               Facility of an overdraft to every basic banking
                                                                account holder would be considered after
     PMJDY to be executed in the Mission Mode,
                                                                satisfactory operation / credit history of six
     envisages provision of affordable financial
     services to all citizens within a reasonable
     distance. It comprises of the following six pillars:-   c. Financial Literacy Programme: Financial
                                                                literacy would be an integral part of the
     a. Universal access to banking facilities:
                                                                Mission in order to let the beneficiaries make
        Mapping of each district into Sub Service
                                                                best use of the financial services being made
        Area (SSA) catering to 1000-1500
                                                                available to them.
        households in a manner that every habitation
        has access to banking services within a              d. Creation of Credit Guarantee Fund:
        reasonable distance say 5 km by 14th August,            Creation of a Credit Guarantee Fund would
        2015. Coverage of parts of J&K, Himachal                be to cover the defaults in overdraft
        Pradesh, Uttarakhand, North East and the                accounts.
        Left Wing Extremism affected districts               e. M i c r o - I n s u r a n c e : To p r o v i d e
        which have telecom connectivity and
        infrastructure constraints would spill over to
        the Phase II of the program (15th August,
                                                                micro- insurance to all willing and eligible
                                                                persons by 14th August, 2018, and then on an             TIMELINE FOR
                                                                ongoing basis.
        2015 to 15th August, 2018)
     b. Providing Basic Banking Accounts with
                                                             f.   Unorganized sector Pension schemes
                                                                  like Swavalamban: By 14th August, 2018
                                                                                                                   FINANCIAL INCLUSION PLAN
        overdraft facility and RuPay Debit card                   and then on an ongoing basis.
        to all households: The effort would be to
        first cover all uncovered households with            Under the mission, the first three pillars
        banking facilities by August, 2015, by               would be given thrust in the first year.

5. Timeline for Financial Inclusion                 Phase II (15th Aug, 2015 - 14th Aug, 2018)
        Plan :                                           •   Overdraft facility up to ` 5000/- after six
     Comprehensive Financial Inclusion of the                months of satisfactory operation / history
     excluded sections is proposed to be achieved        •   Creation of Credit Guarantee Fund for
     by 14th August, 2018 in two phases as under:            coverage of defaults in A/Cs with
     Phase I (15th Aug, 2014 - 14th Aug, 2015)               overdraft limit up to ` 5,000/-.

     •   Universal access to banking facilities in all   •   Micro Insurance
         areas except areas with infrastructure          •   Unorganized sector Pension schemes like
         and connectivity constrains like parts of           Swavalamban
         North East, Himachal Pradesh,                   Some of the Phase II activities would also be
         Uttarakhand, J&K and 82 Left Wing               carried out in Phase I. In addition, in this
         Extremism (LWE) districts.                      phase, coverage of households in hilly, tribal
     •   Providing Basic Banking Accounts and            and difficult areas would be carried out.
         RuPay Debit card which has inbuilt              Moreover, this phase would focus on
         accident insurance cover of ` 1 lakh.           coverage of remaining adults in the
         Aadhaar number will be seeded to make
         account ready for DBT payment.
                                                         households and students.
                                                                                                                 STRATEGY FOR
     •   Financial Literacy Programme
                                                                                                           ACHIEVEMENT OF OBJECTIVES

6. Strategy for achievement of                          modifying it to ensure both operational
        objectives :                                         flexibility and viability of the Bank Mitr
                                                             (Business Correspondent). Technological
     •   In order to achieve the above objectives,           innovations like RuPay card and mobile
         a broad collaborative strategy with all             banking would be made use of. Banks will
         stake holders is proposed. It is proposed           use the RBI's scheme for subsidy on rural
         to encourage Public-Private partnerships.           ATMs and UIDAI's scheme for subsidy on
         Moreover, inter-department convergence              micro ATMs to augment their resources
         and synergies will be gainfully utilised. The       at the village level.
         existing rural infrastructure of post offices
         having Gramin Dak Sewaks would be               •   Convergence with the National Rural
         optimally utilized to become Bank Mitr              Livelihood Mission (NRLM) in rural areas
         (Business Correspondent) of the Banks.              and National Urban Livelihood Mission
         One of the key strategies will be                   (NULM) in urban areas would be sought
         deployment of online fixed point Bank               for in covering each household with bank
         Mitr (Business Correspondent) to deliver            accounts. The expansion plans of the
         basic banking services near to the
         customer doorstep. There are 1.26 lakh
                                                             Department of Telecom to provide
                                                             telecom connectivity in difficult areas
                                                                                                                IMPLEMENTATION OF
         Common Service Centres, out of which
         only 12,000 are BCs of the Banks.
                                                             would be effectively utilized for the
                                                             provision of banking facilities in these     PRADHAN MANTRI JAN-DHAN YOJANA
                                                             areas. Department of Telecom has been
     •   The strategy is to take forward the Bank
         Mitr (Business Correspondent) model for
                                                             requested to ensure that problems of             (PMJDY) IN MISSION MODE
                                                             poor and no connectivity are resolved
         expansion of banking services by                    on priority.

7. Implementation of Pradhan                             staff strength of 1+1 or 1+2 in 74,351        7.1.4 Coverage of SSAs: It is proposed that             (Business Correspondent) wherever
        Mantri Jan-Dhan Yojana (PMJDY)                        villages having population of 2000 or             SSAs shall be covered through a                     required. The exact number of
        in Mission Mode :                                     more which were covered by BCs in the             combination of banking outlets i.e.                 uncovered households at present is not
                                                              earlier campaign. This can be done in a           branch banking and branch less banking.             available with Banks but is estimated to be
     7.1 Reaching out - Network expansion
                                                              phase manner in a period of 3-5 years.            Branch banking means traditional Brick &            about 1.5 crore. In the Urban centres of
        and geographical coverage of the
                                                          7.1.3 Mapping Sub Service Areas (SSAs):               Mortar branches. These branches are                 the district, the Lead District Managers
                                                              Under the present plan, all the 6 lakh            manned by Bank staff and offer complete             (LDMs) would be responsible to
     The first and basic pillar of PMJDY is the                                                                 banking services including third party              coordinate with all available banks in the
                                                              villages across the entire country are to
     expansion of banking network of the country                                                                payments and processing of loan                     centre to cover all households. The
                                                              be mapped according to the Service Area
     to reach out to the financially excluded                                                                   applications. Branchless banking                    Urban centre saturation would be
                                                              of each Bank to have at least one fixed
     segments of the population.                                                                                comprises of fixed point Bank Mitr                  measured by opening at least 150%
                                                              point Banking outlet catering to 1000 to
     7.1.1 Bank Branches & ATMs: In the year                  1500 households, called as Sub Service            (Business Correspondent), who act as                accounts of the Urban households in that
         2013-14, the Public Sector Banks (PSBs)              Area (SSA). Villages with Panchayat               representatives of Bank to provide basic            centre as per Census 2011.
         set up 7840 branches across the country              offices can be made the nodal point. This         banking services i.e. opening of bank           7.1.6 Working of Bank Mitr (Business
         of which about 25% were in rural areas.              approach was tried in 121 DBT districts           accounts, cash deposit, cash withdrawal,            Correspondents): The Bank Mitr
         More than 40,000 ATMs were also set up               and the entire mapping resulted in                transfer of funds, balance enquiries and            (Business Correspondent) outlets (in
         pursuant to the Budget announcement                  creation of 30,855 SSAs. Of these, 30,751         mini statement facility. Besides, they also         both rural and urban areas) would be fully
         of 2013-14 of providing an ATM at                    SSAs were saturated with banking                  provide value added additional services to          equipped with the required
         every branch.                                        facilities. It is estimated that across the       the bank. Villages without Brick and                infrastructure including the computers
     The present banking network of the country               country there would be about 1.3 lakh             Mortar branches of banks would be                   and other peripherals like Micro ATM,
     (as on 31.03.2014) comprises of a bank                   SSAs of which under the present                   covered by fixed location Bank Mitr                 Bio-metric scanners, Printer, Web cam
     branch network of 1,15,082 and an ATM                    campaign, about 0.8 lakh would already            (Business Correspondent) outlets                    and internet connectivity. Bank Mitr
     network of 1,60,055. Of these, 43,962                    be covered by banking facilities and about        preferably at the panchayat office/bus              (Business Correspondent) need to carry
     branches (38.2%) and 23,334 ATMs                         50,000 new SSAs would need to be                  station/local market. The Bank Mitr                 out online transactions for which internet
     (14.58%) are in rural areas and the remaining            covered. Moreover, there are more than            (Business Correspondent) may cater to               connectivity is essential. However, as per
     in semi-urban and metropolitan areas. In the             1.40 lakh BCs of Public Sector Banks and          the neighbouring villages in his area on            the present status there may be certain
     year 2014-15, the Public Sector Banks                    Regional Rural Banks in the rural areas.          pre defined time and days. The working              connectivity related issues particularly in
     propose to set up 7332 branches and 20,130               Public Sector Banks have estimated to set         and visit timing would be prominently               hilly and tribal areas of the country which
     new ATMs. However, given the staff                       up about 31,846 SSAs in order to cover            displayed at his place of working. Every            need to be addressed immediately.
     constraints of banks and the viability of                the entire geography of the country. In           habitation will have access to banking              Hence, there would be a committee
     opening full fledged branches in rural areas,            addition the Regional Rural Banks have            services within 5 km by August, 2015,               consisting of various stakeholders
     the demands for branch expansion far exceed              estimated to set up another 14,216 SSAs           except parts of J&K, Himachal Pradesh,              including BSNL to sort out technology
     the supply. The efficient and cost effective             to complete the SSA coverage. This                Uttarakhand, North East and the 82 Left             related issues. Each Bank Mitr (Business
     method to cover rural areas is by way of                 translates to a target of coverage of             Wing extremism affected districts which             Correspondent) would be given proper
     mapping the entire country through Sub                   46,162 SSAs. Considering the possibility          have telecom connectivity and                       training about basic banking, insurance
     Service Area (SSA) approach and deploying                of some field level data mismatches, a            infrastructure constraints. RBI had                 and pension products and also on
     fully enabled online fixed point Bank Mitr               conservative estimate of coverage of              directed Banks to cover all villages by             customer handling. Adequate
     (Business Correspondent) outlets. Public                 50,000 SSAs is being planned for, under           March, 2016. This task would now need               compensation to the Bank Mitr (Business
     Private Partnerships in this area shall facilitate       the present campaign. However, actual             to be preponed to August, 2015, except              Correspondent) would be ensured for
     the process and promote efficiency and pace              field experience suggests that many of            the hilly, tribal, desert and difficult areas       enabling him to provide uninterrupted
     of coverage.                                             these are not functional. It is estimated         having challenge of Telecom connectivity.           services particularly in the difficult rural
     7.1.2 Swabhiman Villages: In the year                    that 75,000 replacements of non               7.1.5 Urban Financial Inclusion: As per                 and remote areas. The suggested
         2011-12, Banks covered more than                     functional BCs would be required.                 Census 2011, there were 7.89 crore                  remuneration to reach the last mile Bank
         74,000 villages, with population more                There are around 1.26 lakh network of             Urban households out of which 5.34                  Mitr (Business Correspondent) would be
         than 2,000 (as per 2001 census), with                Common Service Centres (CSC) in the               crore households were availing banking              at least ` 5,000/- pm comprising of fixed
         banking facilities under the "Swabhimaan"            country, out of which 12,284 centres are          services. As on 31st March, 2014, the               amount and additional transaction/
         campaign. Looking to viability of each               working as banking BC outlets. All the            Banking network has 71,120 branches                 activity based variable component. While
         centre, banks would strive to set up a               remaining CSCs are proposed to be                 and 1,36,721 ATMs in urban, semi-urban              deciding upon the remuneration
         brick and mortar branch with minimum                 enabled as BC outlets, for banks.                 and metropolitan areas. In Urban areas              structure it would be ensured that the
                                                                                                                too, the Banks would engage Bank Mitr               costs on rent, electricity, internet,
                                                                                                                                                                    travelling etc. are also accounted for.

17                                                                                                                                                                                                                 18
7.1.7 Eligibility for Bank Mitr (Business   Through Corporate BC Companies                  be utilized for coverage of households         opening of basic savings accounts. As per RBI
         Correspondent): Individuals like                     i.e. through private participation. While           under the Financial Inclusion campaign.        estimates, by March 2014, 242 million basic
         unemployed youth & entities like retired             this system has advantages of                   7.1.11 National Unified USSD Platform              savings accounts were opened
         bank employee, retired teachers, retired             administration and centralised control for          (NUUP): USSD based mobile banking              (
         Government / Military personnel, etc.,               the Banks and also insulates them against           can work on all GSM handsets (93% of           iew.aspx?Id=862).
         kirana shops, PDS, PCOs, CSCs,                       several threats, but many times these               current 900 mn). Through USSD mobile           •   Census 2011 estimated that out of 24.67
         NGOs/MFIs and section 25 companies,                  players turn up in exploitation of the last         banking services like Balance Inquiry, Mini        crore households in the country, 14.48
         Self Help Groups (SHG), Civil Society                mile delivery agents (Bank Mitr).                   Statement and Fund transfer will be                crore households had access to banking
         Organisations, agents of small saving   While engaging the Corporate BC                 provided. NPCI to provide Gateway for              services. Public Sector Banks (PSBs) have
         schemes of GoI, individual petrol pump               Companies the remuneration structure                all the banks with single short code -             estimated that by 31.05.2014, out of the
         owner, authorized functionaries of SHG,              for the agents deployed by them and time            *99#. Currently, all smart cell phone              9.17 crore rural households which were
         non deposit taking NBFCs, Post                       line for their payment would be ensured             already enabled to use mobile banking              allocated to them, about 5.23 crore
         Offices/Postman/Gramin Dak Sewak,                    by the respective banks.                            application and basic cell phones are              households have been covered (Bank
         cooperative societies or other eligible                                                                  being enabled now under this platform.             wise details are in Annex 5). This leaves
                                                          7.1.10 Mobile Banking: The Inter-Ministerial
         individuals/entities allowed by RBI from                                                                 USSD based mobile banking services is              about 3.94 crore rural households to be
                                                              group on delivery of basic financial services
         time to time etc may be engaged as Bank                                                                  proposed to be launched on 28th August,            covered by PSBs. In addition, the Regional
                                                              through a comprehensive frame work
         Mitr (Business Correspondent).                                                                           2014. The services will be provided by 40          Rural Banks (RRBs) have also covered
                                                              envisaged the creation of "Mobile and
         Unemployed youth in villages should be                                                                   banks initially and will be joined by 100          about 1.99 crore households out of the
                                                              Aadhaar linked Accounts" by Banks. The
         encouraged to work as Bank Mitr                                                                          banks. Agreement has already been done             3.97 crore households allocated to them,
                                                              basic financial transactions on these
         (Business Correspondent), subject to                                                                     with 11 telecom service providers.                 which leaves 1.98 crore households to be
                                                              accounts can be executed through a
         fulfilling other eligibility conditions. There                                                                                                              covered by them.
                                                              mobile based PIN system using "Mobile           •   Summary of Action Points:
         would be a dress code with a specified
                                                              Banking PoS". Mobile banking through            o   Map the entire country with SSAs:              •   Putting the PSBs and RRBs numbers
         colour for the Bank Mitr (Business
                                                              mobile wallet was launched in 2012. Under           Identification of SSAs at the district level       together implies that about 5.92 crore
         Correspondent). The dress of Bank Mitr
                                                              this service, RBI has authorized 3 telcos and       through the District Level Coordination            rural households are yet to be covered.
         (Business Correspondent) will constitute
                                                              5 non-telcos to launch this service. Three          Committees (DLCCs) has already been                Considering field level data mismatches in
         Jacket, Cap & Bag. The dresses would
                                                              Telcos, Airtel under brand name Airtel              completed.                                         some instances, it is estimated that there
         carry the Mission logo as well as the
                                                              Money, Vodafone under Brand name                                                                       are about 6 crore uncovered households
         logo of the bank. Regular and timely                                                                 o   Allocation of SSAs to different banks has
                                                              Vodafone m-pesa and Idea vide Idea                                                                     which would need to be covered in the
         payment to the Bank Mitr (Business                                                                       also been done.
                                                              Money are active in the space. They                                                                    rural areas.
         Correspondent) for the services
                                                              control over 80,000, 70,000 & 8,000             o   Looking to viability of each centre, banks     •   In addition, account opening of uncovered
         rendered by them would be the key
                                                              agents respectively. Around 60% of these            would strive to set up a brick and mortar          households in urban areas would also be
         factor in ensuring their continuance at the
                                                              Bank Mitr (Business Correspondent) are in           branch with minimum staff strength of              required. At a conservative estimate,
         village level.
                                                              rural areas. Mobile wallet service provided         1+1 or 1+2 in 74,351 villages having               about 1.5 crore uncovered households,
     7.1.8 All Banks to put in place scheme of                by commercial banks e.g., ICICI in case of          population of 2000 or more which were              would need to be covered in urban areas.
         finance to the Bank Mitr (Business                   m-pesa service used for money transfer,             covered by BCs in the earlier campaign.
         Correspondent) with a minimum amount                                                                     This can be done in a phase-wise manner        As per Nandan Nilekani Report of the Task
                                                              bill payment and cash withdrawals. The
         of ` 50,000/- for equipment, ` 25,000/-                                                                  over a period of 3-5 years.                    Force on Aadhaar Enabled Unified Payment
                                                              customer base of customers availing such
         for working capital and ` 50,000/- for                                                                                                                  Infrastructure, Feb 2014: "Another class of
                                                              services is around 70 lakhs. Mobile             o   Monitoring and follow up through a portal
         vehicle loan. A scheme is suggested in                                                                                                                  customer (largely rural, low-income,
                                                              telephony and prepaid wallets would also            of the Department of Financial Services
         Annexure 7.                                                                                                                                             uneducated) have been issued smart cards
                                                                                                                  (DFS), which would capture the progress        that are operated through Bank Mitr
     7.1.9 Suggested variants of the Bank Mitr                                                                    made in setting up these SSAs.                 (Business Correspondent). This innovation
         (Business Correspondent) structure
         could be :                                                                                           7.2 Opening of Basic Saving Bank                   through the use of technology made it
                                                                                                                 Account of every adult citizen:                 possible to bring banking services to Individual Bank Mitr (Business                                                                                                                      un-served areas and un-served population for
         Correspondent) deployed directly by the                                                              The second pillar of this plan envisages
                                                                                                                                                                 the very first time. However, this innovation
         Bank.                                                                                                providing basic bank accounts (Basic Saving
                                                                                                                                                                 has also created proprietary technology
                                                                                                              Bank Deposit Account - BSBDA with zero Utilising the network of Common                                                                                                                     islands, where consumers cannot access their
                                                                                                              balance) to all adult citizens starting with
         Service Centres (CSC).                                                                                                                                  bank account through other channels. The
                                                                                                              coverage of all households. The Financial
                                                                                                                                                                 inconvenience of the channel often leads
                                                                                                              Inclusion campaign in the past has targeted

19                                                                                                                                                                                                                20
customer to withdraw all the money in their           have a production/operationalization               numbers get generated, the eID will be                launching special campaign for opening of
     account." In order to ensure that this does not       constraint and the manufacturing capacity          replaced by the UID number.                           bank accounts of all its members during
     happen in the present mission, inter                  is estimated to be about 18 lakh per day.      7.2.8 It is proposed that DBT including DBT in            the months of August and September,
     operability of the payments will be ensured           The personalization capacity available is          LPG should be pursued to make the                     2014, till March, 2015. For opening of
     both through the debit card and through               also 7.75 lakh per day.                            programme of financial inclusion a                    bank accounts under Pradhan Mantri Jan-
     Aadhaar Enabled Payments at the Bank Mitr         7.2.5 The network of Cooperative/Urban                 success. The list of DBT schemes is given             Dhan Yojana of all uncovered households,
     (Business Correspondent) Outlet as and                Cooperative Banks which are on CBS                 in Annexure - 6.                                      it has been decided that for better
     when the reach of Aadhaar extends to a                would also be used for account opening,                                                                  coordination with the Employee
                                                                                                          7.2.9 A McKinsey (2011) study estimated that
     substantial part of the country.                      of uncovered households.                                                                                 Provident Fund Organisation (EPFO), the
                                                                                                              connecting every Indian household to a
     In the past, it was seen, that many of the                                                                                                                     SLBCs may co-opt Additional Provident
                                                       7.2.6 This account would be linked with                digital payment system and automating
     accounts opened did not have sufficient                                                                                                                        Fund Commissioner (PFC)/RPFC Gr.I as
                                                           the Aadhaar number of the account                  government payment flows can save $22
     number of transactions for banks to find them                                                                                                                  its members. LDMs would also co-opt a
                                                           holder and would become the single                 billion a year, 80% of it from reduced
     viable. This was because these accounts were                                                                                                                   representative of EPFO as members of
                                                           point for receipt of all Direct Benefit            leakages.
     being opened in isolation without proper                                                                                                                       the District Level Bankers' Committee
                                                           Transfers (DBT) from the Central               7.2.10 Each account holder would be
     linkages. Under the present plan, this anomaly                                                                                                                 and organise camps at the Provident Fund
                                                           Government / State Government / Local              provided financial literacy sessions on
     is proposed to be removed by its six pillar                                                                                                                    establishments.
                                                           Bodies. Presently the Direct Benefits              how to manage his/her money and credit
     approach. Moreover, the accounts will also be         Transfer scheme under LPG/Gas delivery             facilities.
     ATM enabled to get the benefits of flexibility.       has been stopped and the Dhande                                                                      7.2.15 Overdraft (OD) up to ` 5,000/- would
     The approach under this pillar of the                                                                7.2.11 The Accounts would be opened in
                                                           committee appointed to study the                                                                         be provided to the customers after six
     campaign would be as follows:                                                                            camp mode to ensure that account may
                                                           scheme has submitted its report. The                                                                     months of satisfactory performance of
                                                                                                              be opened for all eligible residents in time
     7.2.1 Opening of SB account with zero                 other Government schemes under DBT                                                                       saving/credit history. This OD facility
                                                                                                              bound manner and there after account
         balance (BSBDA). For ease of opening of           are continuing but the Government                                                                        would be covered by the Credit
                                                                                                              opening process to take place in ongoing
         accounts Banks would be advised to take           Departments are yet to pay the                                                                           Guarantee Fund proposed to be created
                                                                                                              basis. The dates / day of the camp to be
         benefit of e-KYC approach. Those banks            commission due to Banks. No                                                                              by the Government which is further
                                                                                                              announced in advance through adequate
         who have not activated the e-KYC                  commission has been agreed to in the                                                                     described in section 7.4 of this document.
                                                                                                              and effective publicity locally available.
         facilities would need to incorporate the          DBT for LPG by the Department of                                                                         The Rate of Interest on these accounts is
                                                                                                              The camps would be organised in
         same upto the BC level.                           Expenditure (DoE) on the argument that                                                                   proposed @ base rate + 2% or 12%
                                                                                                              coordination with the Government &
     7.2.2 In order to cut down time on account            these are normal operations for the                                                                      whichever is lower (Including the fees to
                                                                                                              Bank officials. In each of the camp Bank
         opening, under the campaign, a one page           Banks while the 2% commission in other                                                                   be paid to Credit Guarantee fund).
                                                                                                              Mitr ( Business Correspondent) & Bank
         account opening form has been designed            schemes is to compensate banks for the                                                                   All Government benefits to flow into this
                                                                                                              official/s to ensure availability of sufficient
         which may be seen at Annexure 8. All Banks        Bank Mitr (Business Correspondent).                                                                      account - facilitating servicing of interest
                                                                                                              AOFs and other stationary for opening of
         will make suitable amendments in their            Department of Financial Services (DFS)                                                                   & reducing the chances of account
         account opening forms immediately.                has taken up the matter with DoE arguing                                                                 becoming dormant .
                                                           that Banks have to do substantial other        7.2.12 Bank may be required to hold more
     7.2.3 Each SB account holder would be given                                                                                                                7.2.16 Banks will carry out a ground survey
                                                           works in operationalizing the scheme               than one camp in each village till 100%
         ATM/Debit (RuPay) card. In the country                                                                                                                     within three months of the start of the
                                                           including dealing with customer                    saturation level is achieved in that village.
         there are estimated 13.8 crore                                                                                                                             campaign for exact report on coverage of
                                                           grievances but there has been no result of     7.2.13 Convergence with the efforts of the                households with banking facilities.
         agriculture land holders, out of which
                                                           these efforts. This anomaly would need             National Rural Livelihoods Mission
         KCC have been provided to 10.2 crore                                                                                                                   7.2.17 Whenever all the households of a
                                                           to be corrected in order to ensure                 (NRLM) would be sought in order to
         land owners/agriculturist. In the present                                                                                                                  district is provided with bank account, the
                                                           complete buy-in of the banks for the DBT           open bank accounts for the Self Help
         campaign endeavour shall be made to                                                                                                                        District Magistrate will issue a certificate
                                                           schemes. The DBT in LPG which was the              Group (SHG) members.
         provide all KCC holder with RuPay KCC                                                                                                                      to this effect and District will be declared
                                                           largest of all DBT schemes would need to       7.2.14 The Central Provident Fund
         card and non agriculturist may be                                                                                                                          100% covered. Similarly, in states where
                                                           be re-started.                                     Commissioner (CPFC) has been directed
         provided with RuPay debit card. The card                                                                                                                   all the districts are covered will be
         will have inbuilt accident insurance of       7.2.7 There would be a convergence with the            to get bank accounts opened for all                   declared as 100% covered state.
         ` 1 lakh.                                         efforts of UIDAI to enroll beneficiaries for       members of the EPFO as part of
                                                                                                                                                                •   Summary of Action Points:
                                                           Aadhaar number during account opening.             Universal Account Number (UAN)
     7.2.4 It has been ascertained from National                                                                                                                o   About 6 crore bank accounts will be
                                                           The eID numbers so generated during                exercise and financial inclusion policy of
         Payments Corporation of India (NPCI)                                                                                                                       required to be opened in rural areas.
                                                           this campaign will be captured in the bank         the Govt. of India for flow of funds
         that the RuPay cards to be issued do not
                                                           accounts opened. As and when the UID               through the accounts. The CPFC shall be           o   In addition, about 1.5 crore bank

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