Taking the direct transfer of benefit to another level, the government is planning to make it mandatory for all children who apply for government scholarships after passing their class X exams to have savings accounts with public sector banks.
Until Class 8, scholarship amounts would be directed to parents’ accounts.
The move is intended to help children get into the habit of savings from an early age while boosting the overall savings in India. It will also help to bring more people into the formal banking system.
“Students in the age group of 14 to 15 years need to mandatorily have independent bank accounts if they want scholarships…this will also plug loopholes,” said a senior government official.
“The RBI allows minors who are 10 years and above to open bank accounts and this move would will familiarise children with the basics of financial handling,”said a public sector bank chairman who did not wish to be identified.
In most cases, scholarships would be granted to those with annual family income not exceeding Rs 2.50 lakh per annum. Scholarships would also be reserved for girl children of each minority community in a state.
“It is a welcome move as this will instil the habit of savings early in children. Banks would also look at providing RuPay cards to these account holders,” TM Basin, chairman, Indian Banks Association said.
The NDA government has set a target for public sector banks to open 100 million savings accounts under the Pradhan Mantri Jan Dhan Yojana by January 26, 2015, to promote financial inclusion.