Benefits and Facts of Pradhan Mantri Jan Dhan Yojana (PMJDY)

By: DoYouKnow.IN$ | Views: 6754 | Date: 29-Aug-2014

Jan Dhan Yojana roughly translates into English as “People’s Wealth Scheme”. India’s prime minister Narendra Modi announced the launch of this scheme at the historic Red Fort on the occasion of India’s Independence Day.

The Pradhan Mantri Jan Dhan Yojana is the pet project of India’s PM Shri Narendra modi and is aimed at the inclusion of financially excluded people into India’s Banking System.

The first phase of PM Jan Dhan Yojana would last till August 15th, 2015 and will be primarily focused on opening of savings bank account, issuing of Rupay debit cards to new account holders, provision of accident insurance cover and extending of loans / overdraft facilities to these new account holders. A Credit Guarantee Fund to cover defaults on overdrafts is also expected to be created in this year. Some experts believe that it might cost the government as much as Rs 70,000 crore.

In the second phase which will begin from August 2015 and last till August 2018, it will be focused on provision of micro-insurance and enrollment in pension services.

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10 Facts about Pradhanmantri Jan-Dhan Yojana

  • The name “Jan Dhan” was chosen through an online competition on the MyGov Platform and received more than 6000 suggestion from Indian citizens. After evaluation the jury shortlisted “Jan Dhan” which was suggested by 7 individuals.
  • The slogan for the Pradhanmantri Jan Dhan mission is expected to be ” Mera Khata – Bhagya Vidhaata” which when translated into English means ” My Bank Account – The Creator of the Good Fortune”:
  • The primary aim of the Jan Dhan Yojana is to bring poor financially excluded people into the banking system by providing them bank accounts and debit cards.
  • The scheme will cover both urban and rural areas of India and all bank accounts opened will be linked to a debit card which would be issued under the Ru-Pay scheme. ( Rupay is India’s own unique domestic card network owned by National Payments Corporation of India and has been created as an alternative to Visa and Mastercard.)
  • Every individual who opens a bank account becomes eligible to receive an accident insurance cover of up-to Rs 1 Lakh for his entire family.
  • The Pradhan Mantri Jan Dhan Yojana has set an ambitious target of bringing in more than 7.5 crore un-banked families into India’s banking system by opening more than 15 Crore bank accounts at the rate of two bank accounts per household.
  • Once the bank account has been active for 6 months and has been linked to account holders Aadhar identity , they would become eligible for an overdraft of up to Rs 2,500 , which would further be enhanced by the bank to Rs 5000 over time.
  • The Jan Dhan Yojana also seeks to provide incentives to business and banking correspondents who serve as link for the last mile between savings account holders and the bank by fixing a minimum monthly remuneration of Rs 5000.
  • The long term vision of the Jan Dhan Yojana is to lay the foundation of a cashless economy and is complementary to the Digital India Scheme.

Loans under PMJDY

  • As incentives to new account holders, they can avail an over-draft (loan) of up to Rs 5000 rupees on their savings account which will be given at the discretion of the Bank. This loan amount would then be further raised to Rs 15,000, if there is timely repayment of the first loan taken by the account holder.
  • This provision of overdraft on each savings account is to primarily make cheap credit available to ordinary citizens in India who would have to otherwise depend on money lenders who charge very high interest rates.
  • The overdraft will only be given to those savings accounts which have been linked to an Aadhaar Unique Id, this is to prevent fraud and ensure that individuals do not open multiple savings accounts with the aim of cornering the credit facilities.
  • The PMJDY scheme has taken a leaf from the Microfinance Sector in India where Microfinance Companies initially provide a small loan and only later increases the size of the loan disbursement when the microfinance client has successfully repaid his first loan. This ensures that only credit worthy individuals with the financial capacity to repay, get loans.
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