Banks driving Jan Dhan Yojana with vigour and focus

Prime Minister Narendra Modi's much-talked about Jan Dhan Yojana for financial inclusion has already taken a snipe at thousands of money lenders and illegal chit funds that have struck deep roots across the far-flung villages of India.

Opening about 1.5 crore small, zero-balance accounts through 77,852 special camps by banks held across the country, wasn't an easy task for banks.

Apart from empowering the account holder against the local baniyas and chit funds, these accounts are also meant to prevent pilferage of the subsidy schemes of the government by directly transferring the benefits to the beneficiaries.

But the problem of fake or duplication of accounts may be high as banks do not have a method of checking and ruling out duplication, as people do not have common identification number. The accounts offered an accident cover of Rs 1 lakh and a life insurance cover of Rs 30,000. Each account will get an overdraft facility of Rs 5,000 after a few months of satisfactory operation of the account. All the accounts will come with a debit card -- the Rupay card, which will be loaded with these insurance covers.

A senior public sector banker said, "It is almost impossible to prevent duplication in such a mammoth exercise because banks were chasing the targets and there is no mechanism to prevent. But even if there is duplication a lot of financially excluded would have also come into the banking system. The free insurance factors and the overdraft facility really drove crowds to the camps and bank branches."

State Bank of India (SBI), the country's largest bank with the largest network of over 16,000 branches and 50,000 business correspondents, has set up 3.75 crore accounts. For the Jan Dhan Yojana, the bank had set up 11,274 camps and added 20.13 lakh accounts in a period of 15 days.

Arundhati Bhattacharya, SBI chairman, said, "With evidence of economy bottoming out, the stage is now set for a palpable growth revival through incremental steps. Inflation, though subsided, remains a lingering concern. Externally, we are now more sound and stable. Use of debit cards will allow the unbanked to start building a transaction history, which can be a decisive step in initiating them towards financial inclusion."

The second largest public sector bank, Bank of Baroda has added 14.94 lakh accounts through 7,610 camps and 6,811 sub-service centres. All banks have to achieve a target of 7.5 crore accounts within a year of making financial inclusion a thrust area for its rural banking initiatives.

ICICI Bank, the largest private lender which introduced about 18.5 million unbanked people into the banking fold, plans to open 2.5 million accounts under the Jan Dhan Yojana, there by taking the total number of accounts under its financial inclusion programme to more than 20 million. The bank conducted 1,100 camps, in its branches and in villages during the special drive.

Chanda Kochhar, managing director & CEO, ICICI Bank, said, "The bank has been working on a comprehensive financial inclusion plan over the last four years. The Jan Dhan Yojana inspires us to renew our commitment to the goal of financial inclusion with even greater vigour and focus."

IDBI Bank is another bank which opened more than 3.62 lakh basic savings accounts under this plan, as against a targeted number of 2 lakh accounts and held camps at more than 6,800 locations across the length and breadth of the country. Most of the other public sector banks have set up over one lakh accounts.

Overall, the programme has been launched with a roaring success. But the challenge for banks is to stay focused and continue with their efforts to rope in more unbanked villagers to reach their targets.