The Pradhan Mantri Jan Dhan Yojana (PMJDY) completed seven years on Saturday and the Union ministry of finance said that over 430 million accounts have been opened under the scheme as of August 18, 2021. The scheme is touted as "one of the biggest financial inclusion initiatives in the world", it added.
The scheme ensures access to financial services, namely savings and deposit accounts, remittance, credit, insurance and pension in an affordable manner to the country's poor and marginalised section of the society.
PMJDY also provides an overdraft facility.
What is the overdraft facility?
It is a financial facility or instrument that enables an account holder to withdraw money from his/her bank account (savings or current), even if they do not have any account balance.
Like any other credit facility, the bank levies an interest rate when an account holder avails the overdraft facility. Overdraft facility is usually offered for the withdrawal of a limited amount of money.
Overdraft in PMJDY
The Centre's scheme allows the Jan Dhan account holders to withdraw money upto ₹10,000 in the form of a short-term loan. This limit was earlier ₹5,000 but the government doubled the amount last year.
How does the overdraft facility work for PMJDY account holders?
{{/usCountry}}How does the overdraft facility work for PMJDY account holders?
{{/usCountry}}The government is allowing the PMJDY account holders to borrow more money than that is available in their accounts, it has laid down certain criteria to avail the facility.
The owner of a PMJDY account who wants to avail the overdraft facility, must have been satisfactorily operating it for at least six months. Also, only one member of a particular family can avail the overdraft facility. Usually female members are favoured for this.
The account holder should also have a good credit history. For overdraft of upto ₹2,000, no guarantee is needed under PMJDY.
The government has also increased the upper age limit for overdraft from 60 to 65 years.