Financial Inclusion in India – Objectives, Schemes and Overview

The Government of India is following its financial policy of financial inclusion since the past 6 years and considerable progress is being done day by day. An aspirant who is preparing for any of the banking competitive exams or rather we could say any of the competitive exams which could probably ask the financial awareness of our nation or the general affairs of our nations should not miss the objective schemes key highlights of the financial inclusion policy. Let us look into the objective schemes key highlights updates and overview regarding the national mission of financial inclusion (NMFI).

What is Financial Inclusion?

Financial inclusion or rather we call it officially as National Mission for Financial Inclusion is a policy formulated by the central government of India in August 2014 in order to provide universal banking services for every unbaked household, based on the guiding principles of banking the unbanked, securing the unsecured, funding the unfunded and serving unserved and underserved areas. The policy is called by the name Prdanmanthri Jan Dhan Yojana. The policy is aimed to increase the financial access and converge the underprivileged and the excluded sections of the society under the ambit of enjoying banking finance. The policy has certain objectives or rather we call it as the achievements so far.

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Key Highlights Achievements and Schemes

Access to Banking

This is one of the major achievements of the PMJY policy. The people who were deprived of access to banking have been facilitated by the banking access with this scheme by setting up of banking service points throughout rural India by mapping over 6 lakh villages into 1.6 lakh Sub Service Areas (SSAs). The ATM services have also been enabled as part of this banking expansion to rural areas.

Rapid financial inclusion of women

Out of total savings accounts, there were overall 27% female accounts in March 2014. However, under PMJDY, women accounts constitute 53% of the total Jan Dhan accounts as on 30.3.2019.

Rapid growth in deposits in the PMJDY account

As against an average balance of Rs. 1,065 in accounts opened under PMJDY in March 2015, the average balance has grown to Rs. 2,725 as on 30.3.2019 with an overall balance in PMJDY accounts of Rs 96,107 crore

RuPay Debit cards

A total of 27.91 crore RuPay debit cards have been issued till 30.03.2019 to PMJDY account-holders. Apart from banking convenience, these cards come with an inbuilt accident insurance cover of Rs 2 lakh.

Overdraft facility for PMJDY account holders

An overdraft facility of up to Rs 5,000 ( since enhanced to INR 10,000 ) after satisfactory operation in the account for six months is available to provide hassle free credit to the beneficiaries under PMJDY.

Life Insurance cover under Pradhan Mantri Jan Dhan Yojana (PMJDY)

Pradhan Mantri Jan Dhan Yojana was launched on 28.08.2014 to open bank accounts of people not covered by banking services. One of the benefits under the scheme is providing life insurance cover of Rs 30,000/- on death of the life assured due to any reason to the deceased’s family who have opened a bank account between 15.08.2014 to 31.01.2015 (subject to Govt. guidelines and eligibility criteria provided). The scheme is being implemented through Life Insurance Corporation of India (LIC).

A Digital Pipeline for PMJDY

A digital pipeline has been laid for the implementation of PMJDY through the linking of Jan-Dhan account with mobile and Aadhaar [Jan Dhan-Aadhaar-Mobile (JAM)].This infrastructure pipeline is providing the necessary backbone for Direct Benefit Transfers (DBT) flows, adoption of social security/pension schemes, facilitating credit flows and promoting digital payments through use of Rupay Cards and thereby accelerating the pace of attaining the goal of a secured, insured, digitized and a financially empowered society. Around 8 core PMJDY accounts are receiving Direct Benefit Transfers (DBTs) credits under various schemes of the Government.

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Jan Dhan Darshak

A geographic information system(GIS) mobile application, has also been launched to provide a citizen centric platform for locating financial service touch points across all providers such as banks, post offices, ATMs, CSC, etc. These services could be availed as per the needs and convenience of the common people. The web version of this application is Findmybank (findmybank.gov.in). This application can be used for various administrative purposes like business strategies for banks.

Stand Up India Scheme

The Stand up India scheme was launched by the government as part of the NMFI on 5 April 2016. The Stand-Up India scheme caters to promoting entrepreneurship amongst women, SC & ST category i.e those sections of the population facing significant hurdles due to lack of advice/mentorship as well as inadequate and delayed credit. The scheme intends to leverage the institutional credit structure to reach out to these underserved sectors of the population in starting greenfield enterprise. It caters to both ready and trainee borrowers. The Scheme facilitates bank loans between Rs.10 lakh and Rs.1 crore to at least one Scheduled Caste/ Scheduled Tribe borrower and at least one Woman borrower per bank branch of Scheduled Commercial Banks for setting up greenfield enterprises in trading, manufacturing and services sector.

To extend collateral free coverage, the Government of India has set up the Credit Guarantee Fund for Stand Up India (CGFSI). The scheme is built on the concept of providing handholding support to those borrowers who might have a project in mind but lack the confidence and capability to start up. It also provides for convergence with Central/State Government schemes. Applications under the scheme can also be made online. An online tracking system in the dedicated Stand Up India portal (www.standupmitra.in) is being utilised.

Pradhan Mantri Mudra Yojana

An important aspect of financial inclusion is enabling the flow of credit to small businesses. In pursuance of the announcement in the Union Budget 2015-16, the Micro Units Development finance Agency (MUDRA) was set-up and the PradhanMantri Mudra Yojana (PMMY) launched on 8th April, 2015.

For achieving sustained expansion in the flow of credit to the non-corporate small business sector, loans up to Rs. 10 lakh without collateral are extended to borrowers under PMMY. These loans are extended through partner Member Lending Institutions (MLIs) – such as Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs) and Micro-Finance Institutions (MFIs). In turn, MUDRA Ltd. offers refinance to MLIs for PMMY loans extended by them. The loans under PMMY are categorized as:

• Shishu (up to Rs.50,000)
• Kishore (Rs.50,000 to Rs.5 lakh)
• Tarun (Rs.5 lakh to Rs.10 lakh).

Social Security Schemes

As part of the NMFI with an aim to move towards creating a universal social security system for all Indians, especially the poor and the under-privileged, three ambitious Jan Suraksha Schemes or Social Security Schemes pertaining to Insurance and Pension Sector were announced by the Government in the Budget for 2015-16. The schemes were launched on 9th May, 2015, for providing life & accident risk insurance and social security at a very affordable cost namely

• Pradhan Mantri Suraksha Bima Yojana
• Pradhan Mantri Jeevan Jyoti Yojana
• Atal Pension Yojana.

Atal Pension Yojana

The Scheme aims to provide monthly pension to eligible subscribers not covered under any organized pension scheme. APY is open to all bank and post office account holders in the age group of 18 to 40 years. Under APY, any subscriber can opt for a guaranteed pension of Rs 1000 to Rs 5000 (in multiples of Rs. 1,000) receivable at the age of 60 3 years. The contributions to be made vary based on the pension amount chosen. The APY is primarily focused on all citizens in the unorganised sector, who join the National Pension Scheme (NPS).

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Conclusion

These are the key features and overview regarding the National mission of financial inclusion (NMFI) or rather we simply call it a financial inclusion policy. Hope that the development in this area is not final but a lot more to come. Enrol to Entri app for the updates of the upcoming schemes and policies which give drastic importance to the financial affairs in our nation that will help not only to understand the financial system of our nation but also help you to bash your best in the competitive exams like every bank exam. Keep studying Keep winning.