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Fifteen million Indians across the country opened bank accounts on Thursday as Prime Minister Narendra Modi rolled out his government’s ambitious Pradhan Mantri Jan Dhan Yojana with a promise to end “financial untouchability”.
The banking-for-all scheme aims to cover 75 million people by January, and if successful will provide banking access to a majority of India’s 1.2 billion people.
“Mahatma Gandhi worked towards removing social untouchability. If we want to get rid of poverty, we have to first get rid of financial untouchability. We have to connect every person with the financial system,” the PM said.
Going back to a personal anecdote, he recalled how a ‘Mr Vora’ from the state-owned Dena Bank had once visited his school, underlining the importance of saving money, and helped him open an account, even presenting him and his classmates with a piggybank each. “That piggybank did not get a rupee as I did not have (a wealthy) background,” he said. Later, as he wandered the Himalayas and travelled across the country, he came to know that the bank officials were looking for him to close that account. “They probably searched for me for 20 years,” he told the audience at Vigyan Bhawan.
Watch: Modi launches mega financial plan 'Jan Dhan Yojana'
“If 40% of Indians are not part of the economy, how can we be successful in eradicating poverty. “This is such a big right. The right to operate your bank account. This will provide security in life,” he said, adding, “Ab mere gareeb ke paas bhi debit card hoga... (now the poor will also have debit cards)... It will give them psychological strength.”
Under the programme, 75 million bank accounts — two per household— will be opened by January 26, 2015. These will come with an overdraft facility of `5,000, which will kick in six months after the account is opened. Account holders will get debit cards of RuPay — an Indian payment gateway like Visa and Mastercard — and accidental insurance cover of Rs. 1 lakh. An additional life insurance cover would be provided to those who open their accounts by the January date.
The PM said welfare payments would be transferred directly into the accounts, helping the “fight against corruption”. He also said that unlike some industrial houses that have a poor credit repayment record, the common man and the poor made timely repayments 99% of the time.
More than four out of 10 adults in India still don’t have bank accounts. From a global perspective, there’s a lot of catching up to do. In India, for every 100,000 population, there are only about 11 bank branches and 10 ATM machines. In Brazil, its BRICS partner, the same population has 47 branches and 120 ATMs.
“Sixty-eight years after Independence, not even 68% of the population has bank accounts,” the PM said, adding that he had emailed 700,000 bank employees urging them to support the initiative.
The Jan Dhan scheme — named after an online competition on the portal ‘MyGov’, which received more than 6,000 suggestions — was launched simultaneously across the country by 20 chief ministers as well as union ministers such as Sushma Swaraj (Bhopal), Rajnath Singh (Lucknow) and Smriti Irani (Surat).
Finance minister Arun Jaitley said the scheme would be taken up on a “mission mode.”
Reserve Bank governor Raghuram Rajan, minister of state for finance Nirmala Sitharaman, principal secretary to the PM Nripendra Misra, cabinet secretary Ajit Seth and secretary (financial services) GS Sandhu were also present at the launch.