All accounts with zero balance to get Rs 1-lakh insurance cover | business | Hindustan Times
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All accounts with zero balance to get Rs 1-lakh insurance cover

business Updated: Sep 01, 2014 00:18 IST
Mahua Venkatesh

The benefit of accidental insurance cover of Rs 1 lakh, extended to all those who open fresh accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) launched on August 28 by Prime Minister Narendra Modi, would now include even those who have opened zero balance accounts prior to August 28, to avoid duplication.

The premium for the insurance cover will be borne by the National Payments Corp of India.

"We have decided that the insurance cover would be extended to all existing account holders with zero balance, so that there is no duplication," TM Bhasin, chairman, Indian Banks' Association, told HT. Bhasin said they would have to apply for the insurance cover and the RuPay card to avail the benefits.

There have been instances where account holders had closed down zero balance accounts under the earlier financial inclusion programme only to open new ones to avail the benefits, bankers said. Moreover, households who already have accounts have approached banks for fresh ones to get the insurance benefits.

"There have been some duplication and there are many who have tried to close their existing zero balance accounts to open new ones only for the benefits…then there are also cases where a member of the household who has an account has applied for another account under another member's name," a bank official said on the condition of anonymity.

The government, along with the IBA, is closely monitoring the programme. Banks have been given targets for opening accounts under the PMJDY. Bank officials who exceed their targets would also be given incentives.

Over 2 crore accounts have already been opened under the PMJDY. All payments for schemes under the direct benefit transfer will be made through these accounts and RuPay cards.

Each account holder would also get an overdraft of Rs 5,000 after six months of operation of the account. The credit limit would be enhanced by the lenders in case the borrower repays on times.