Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched by our Prime Minister Sh. Narendra Modi on Aug 28, 2014. The key objective of this scheme is Financial Inclusion i.e. to provide banking & financial services in affordable manner. Though we all know primary benefits of Pradhan Mantri Jan Dhan Yojana but lets discuss key inclusions and exclusions of Pradhan Mantri Jan Dhan Yojana for the benefit of readers.
Highlights of Pradhan Mantri Jan Dhan Yojana
(a) Life insurance cover of Rs 30,000 (Applicable only if savings account is opened between Aug 15, 2014 and Jan 26, 2015)
(b) Accidental Insurance Cover of Rs 1 Lakh. To avail Accidental Insurance cover, the RuPay debit card must be used atleast once in last 45 days. Not many people are aware that this accidental insurance cover is inbuilt with RuPay Debit Card even if the card is availed against bank account not covered under Pradhan Mantri Jan Dhan Yojana. Regular Free Accidental Insurance linked to RuPay debit card is valid till Mar 31, 2015.
(c) Overdraft facility of Rs 5,000. There is a General impression that Govt will deposit Rs 5,000 in bank accounts if account is opened under Pradhan Mantri Jan Dhan Yojana. It is not true, overdraft facility is conditional and will depend on satisfactory operation of the savings account for 6 months. Many households have opened savings account in the name of all family members so that they can get Rs 5,000 in each account. Fact of the matter is that overdraft facility is available only one account per household. Preference for overdraft facility will be given to the female member of household. Moreover interest will be charged on overdraft facility.
(d) Zero Balance Savings Account
(e) Account can be opened only with Aadhaar Card. Besides Aadhaar card, No other document is required. Even if none of the “officially valid document” is available, a person can open “Small Account” under Pradhan Mantri Jan Dhan Yojana. For Small Accounts, account holder has to produce “officially valid document” within 12 months of opening “Small Account” or Aadhaar Card.
Imp Note for Small Accounts: Following restrictions are applicable on Small Account
(a) Balance in small account cannot exceed more than 5ok at any given point of time
(b) Total deposits in small account cannot exceed 1 lakh during 12 months
(c) Max withdrawal per month is restricted to Rs 10k
Convert Existing Bank Account to account under Pradhan Mantri Jan Dhan Yojana: Any existing bank account can be converted by submitting a simple request to issue RuPay debit card linked to existing account. Overdraft facility can be extended in the existing account if it is operated satisfactorily.
10 Points you don’t know about Pradhan Mantri Jan Dhan Yojana
1. Interest on overdraft facility: If you avail overdraft facility then you will be charged interest on same. Rate of interest will Prevailing Base Rate of the bank + 2% or 12% whichever is lower.
2. Life Insurance Cover Eligibility: Life Insurance cover under Pradhan Mantri Jan Dhan Yojana is not available for everyone even if the savings account is opened under the scheme. Basic eligibility criterion is
(a) Bank account opened under Pradhan Mantri Jan Dhan Yojana should be the 1st bank account of the insured. It should be opened between Aug 15, 2014 and Jan 26, 2015.
(b) Person should be Head of the family or earning member of the family
(c) Age Bracket is 18-59
(d) Account holder should have active RuPay debit card i.e. RuPay debit card must be used atleast once in last 45 days
(e) Life Insurance cover is available only for one person in the family
(f) To avail Life Insurance Cover, a Biometric card linked to savings account is required
3. Exclusions from Life Insurance Cover: Following set of persons are not be eligible for Life Insurance cover under Pradhan Mantri Jan Dhan Yojana
(a) Govt employees (both serving & retired) and their immediate family
(b) Persons who file Income Tax Return or TDS is deducted
(c) Persons covered under Aam Aadmi Bima Yojana
(d) Persons who are already covered under any other Life Insurance Cover
4. Zero Balance Savings Account only without Cheque Book Facility: if the account holder opt for cheque book linked to savings account then account holder need to maintain minimum balance in savings account. Zero balance savings account is opened only for account holder without cheque book facility.
5. Life Insurance Cover is available only for 5 Years
6. Accidental Insurance Cover is given by HDFC Ergo and Life Insurance Cover is given by LIC
7. Mobile Banking through USSD: Mobile Banking facility is available on all the mobile phones even on basic mobile phones across all telecom operators. Person has to register for mobile banking & bank will issue Mobile PIN. Person can access Mobile Banking Facility by dialing *99# from registered mobile no. Telecom operator may charge fees per transaction from customer which cannot exceed Rs 1.50 per transaction.
8. Joint savings account can be opened under Pradhan Mantri Jan Dhan Yojana
9. There is No Fees or Charge to open bank account under Pradhan Mantri Jan Dhan Yojana
10. A minor of more than 10 year age can open savings account in any bank
Closing Remarks: Pradhan Mantri Jan Dhan Yojana is very important step towards financial inclusion. It will help to fix the leakages from existing system thus savings for govt to bring fiscal deficit in control. Going forward, similar to DBT (Direct Benefit Transfer) all payouts of social welfare schemes of Govt will be transferred directly to the bank account of beneficiary. Pradhan Mantri Jan Dhan Yojana will also unlock the money lying unused i.e. will bring more money in circulation. All these advantages of this scheme will indirectly help to bring economy back on track.
In my opinion, Pradhan Mantri Jan Dhan Yojana will also help to weed out Black money from Indian economy. With the increasing use of RuPay debit card, the virtual currency will gain traction which will decrease the use of Physical currency. It will be easy to track all transactions in banking system with PAN and Aadhaar being common in all transactions. I will discuss this topic on Black Money in detail in my next post.
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Image Courtesy: Jan Dhan Yojana
Copyright © Nitin Bhatia. All Rights Reserved.
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