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Dark side of the Pradhan Mantri Jan Dhan Yojna: Why 14 crore bank accounts are not the yardstick to measure the scheme’s success

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By Harshmeet Singh

‘Mera khaataa Bhagya Vidhata’, the motto of one of the most ambitious schemes of the central Government, the Pradhan Mantri Jan Dhan Yojna, depicts a picture which is far from the present reality. The Government has been patting its back highlighting that more than 14 crore bank accounts have been opened under the scheme till 31st March. But if just swelling up the number of accounts is the yardstick to measure the scheme’s success, UPA’s ‘Swabhimaan’ scheme, which saw more than 60 million accounts opening, should be called a similar success!

According to a recent World Bank report, the Jan Dhan Yojna, so far, has failed to address the biggest challenge – keeping the accounts active. Moreover, there is still no clarity over a number of ‘spectacular’ features that the government has been so vocal about! This gives rise to a crucial question – Is the Pradhan Mantri Jan Dhan Yojna just an empty vessel with too much noise and nothing inside? Let’s dissect the different aspects of the scheme individually (including the ones not covered in the advertisements!) before we arrive at any conclusion.

Insurance at no cost. Wait! Is it?

According to the features of the scheme, every account holder would be provided with an accidental insurance of Rs 1 Lakh and a life insurance cover of Rs 30,000. This clause comes with a ‘secret condition’ which hasn’t been mentioned in the advertisements promoting the scheme. The condition says that to be eligible for the accidental cover, you must use your RuPay debit card for a transaction at least once in every 45 days. Since the scheme majorly targets the rural population, it won’t be incorrect to assume that most of the customers would lose out on this insurance due to dormant debit cards.

This insurance is attached to the RuPay debit card which would be given to the account holder. The RuPay card is a product of RBI’s National Payments Corporation of India (NPCI). The insurance premium, in case of a mishap, would be payable by the NPCI. Since NPCI’s earnings would depend upon the usage of RuPay card by the customers, the only way for the NPCI to compensate for the insurance premiums is to ensure that the debit cards are used frequently.

The Life insurance cover, on the other hand, has its own hidden conditions. Only the account holders with the age of above 18 and below 59 would be eligible for this insurance cover. Moreover, insurance would only be provided to the account holders with valid Aadhaar card. A number of experts also say that since the account holders aren’t given any official paper guaranteeing their insurance cover, they would have a hard time in claiming the amount.

An overdraft facility of Rs 5,000! Awesome! But who pays?    

One of the most talked about features of the scheme remains the Rs 5,000 overdraft facility once the account is 6 months old. According to the Government, it would depend upon the discretion of the banks to provide this facility to the account holder. The vague directions from the Government say that ‘the transactions of the first six months must be satisfactory in view of the bank’

Although there were some speculations about NABARD acting as a guarantor for the funds released through the overdraft facility, there hasn’t been any official confirmation in this regard.

Spare a thought for the Public Sector Banks please!

This scheme presents a precarious situation for the Public Sector Banks. Their bosses (Government) come out with populist schemes without consulting them and then question them if they fail! Although the Government directed the banks to open accounts on a zero minimum balance basis, these accounts collectively had a balance of over Rs 15,000 crore till 31st March. While this seems a bright spot at the first look, it only comes down to an average account balance of little over Rs 1,000.

The Banks require certain minimum account balance in order to recover the operational cost of the accounts. This ‘minimum balance’ is much more than the figure of Rs. 1,000 (Rs 10,000 – Rs 15,000 for Banking Correspondent model). In short, these accounts would put a humungous operational cost upon the already stressed Public Sector Banks. With most of these accounts remaining dormant, the banks can’t be blamed for feeling hard done by the scheme.

Banking Correspondent model – Is it the right way ahead? 

The most critical aspect of financial inclusion remains the ‘last mile connectivity’. With less than 50,000 out of the total 6 lakh villages having a bank branch, the government has decided to go ahead with the Banking Correspondent Agent model to ensure financial inclusion.

A Banking Correspondent Agent usually earns 2% commission on every transaction, thus earning a monthly income of close to Rs. 2,000. With such low incomes and a tough job environment, these correspondents frequently give up their jobs. In fact, according to a recent survey by the RBI, almost 47% BCAs are missing from their jobs. There have also been instances where these BCAs have demanded illicit service charge from the rural customers. Such commissions are charged for a number of services including withdrawing money and loan processing. The current strength of BCAs, according to the RBI, is close to 3 lakh but their impact is still far from satisfactory. While the Government plans to increase the number of BCAs, it would also result in an increased operating cost for the Banks.

According to the 2011 census, only 59% households in India have a bank account. Considering the gloomy situation, the need for financial inclusion in the country is imperative. But launching schemes without a properly thought out framework would only give rise to disappointment on the part of the public and the Government itself.

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  • The article has given eye-opening information on Jan Dhan Yojna. It is obvious a lot of propaganda has been done about it, but on the ground the success is far from satisfactory. I have yet to hear from government or any other quarter, how many so far have got the accidental insurance benefit under Jan Dhan Yojna, perhaps not even a couple of thousand. Some body should ask this question using RTI.

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  • The article has given eye-opening information on Jan Dhan Yojna. It is obvious a lot of propaganda has been done about it, but on the ground the success is far from satisfactory. I have yet to hear from government or any other quarter, how many so far have got the accidental insurance benefit under Jan Dhan Yojna, perhaps not even a couple of thousand. Some body should ask this question using RTI.

Next Story

North Korea Allegedly Stole Millions Of Dollar From Online Bank Heist

The Silicon Valley-based company says it is aware of continuing, suspected APT38 operations against other banks.

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A man holds a laptop computer as cyber code is projected on him in this illustration picture. VOA

North Korea’s nuclear and missile tests have stopped, but its hacking operations to gather intelligence and raise funds for the sanction-strapped government in Pyongyang may be gathering steam.

U.S. security firm FireEye raised the alarm Wednesday over a North Korean group that it says has stolen hundreds of millions of dollars by infiltrating the computer systems of banks around the world since 2014 through highly sophisticated and destructive attacks that have spanned at least 11 countries. It says the group is still operating and poses “an active global threat.”

It is part of a wider pattern of malicious state-backed cyber activity that has led the Trump administration to identify North Korea — along with Russia, Iran and China — as one of the main online threats facing the United States. Last month, the Justice Department charged a North Korean hacker said to have conspired in devastating cyberattacks, including an $81 million heist of Bangladesh’s central bank and the WannaCry virus that crippled parts of Britain’s National Health Service.

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US Dollar Image, pixabay

DHS offers warning

On Tuesday, the U.S. Department of Homeland Security warned of the use of malware by Hidden Cobra, the U.S. government’s byword for North Korea hackers, in fraudulent ATM cash withdrawals from banks in Asia and Africa. It said that Hidden Cobra was behind the theft of tens of millions of dollars from teller machines in the past two years. In one incident this year, cash had been simultaneously withdrawn from ATMs in 23 different countries, it said.

North Korea, which prohibits access to the world wide web for virtually all of its people, has previously denied involvement in cyberattacks, and attribution for such attacks is rarely made with absolute certainty. It is typically based on technical indicators such as the Internet Protocol, or IP, addresses that identify computers and characteristics of the coding used in malware, which is the software a hacker may use to damage or disable computers.

But other cybersecurity experts tell The Associated Press that they also see continued signs that North Korea’s authoritarian government, which has a long track record of criminality to raise cash, is conducting malign activity online. That activity includes targeting of financial institutions and crypto-currency-related organizations, as well as spying on its adversaries, despite the easing of tensions between Pyongyang and Washington.

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People watch a news broadcast announcing the Singapore summit meeting between North Korean leader Kim Jong Un and U.S. President Donald Trump, on a giant television screen outside the central railway station in Pyongyang,VOA

“The reality is they are starved for cash and are continuing to try and generate revenue, at least until sanctions are diminished,” said Adam Meyers, vice president of intelligence at CrowdStrike. “At the same time, they won’t abate in intelligence collection operations, as they continue to negotiate and test the international community’s resolve and test what the boundaries are.”

North Korea attacks continue

CrowdStrike says it has detected continuing North Korean cyber intrusions in the past two months, including the use of a known malware against a potentially broad set of targets in South Korea, and a new variant of malware against users of mobile devices that use a Linux-based operating system.

This activity has been taking place against the backdrop of a dramatic diplomatic shift as Kim Jong Un has opened up to the world. He has held summits with South Korean President Moon Jae-in and with President Donald Trump, who hopes to persuade Kim to relinquish the nuclear weapons that pose a potential threat to the U.S. homeland. Tensions on the divided Korean Peninsula have dropped and fears of war with the U.S. have ebbed. Trump this weekend will dispatch his top diplomat, Mike Pompeo, to Pyongyang for the fourth time this year to make progress on denuclearization.

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Ji Seong-ho, North Korean refugee and president of Now Action and Unity for Human Rights. VOA

But North Korea has yet to take concrete steps to give up its nuclear arsenal, so there’s been no let-up in sanctions that have been imposed to deprive it of fuel and revenue for its weapons programs, and to block it from bulk cash transfers and accessing to the international banking system.

FireEye says APT38, the name it gives to the hacking group dedicated to bank theft, has emerged and stepped up its operations since February 2014 as the economic vise on North Korea has tightened in response to its nuclear and missile tests. Initial operations targeted financial institutions in Southeast Asia, where North Korea had experience in money laundering, but then expanded into other regions such as Latin America and Africa, and then extended to Europe and North America.

In all, FireEye says APT38 has attempted to steal $1.1 billion, and based on the data it can confirm, has gotten away with hundreds of millions in dollars. It has used malware to insert fraudulent transactions in the Society for Worldwide Interbank Financial Telecommunication or SWIFT system that is used to transfer money between banks. Its biggest heist to date was $81 million stolen from the central bank of Bangladesh in February 2016. The funds were wired to bank accounts established with fake identities in the Philippines. After the funds were withdrawn they were suspected to have been laundered in casinos.

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North Korea, which prohibits access to the world wide web for virtually all of its people, has previously denied involvement in cyberattacks

Cyber attacks an alternative

The Foundation for Defense of Democracies, a Washington think tank, said in a report Wednesday that North Korea’s cyber capabilities provide an alternative means for challenging its adversaries. While Kim’s hereditary regime appears to prioritize currency generation, attacks using the SWIFT system raise concerns that North Korean hackers “may become more proficient at manipulating the data and systems that undergird the global financial system,” it says.

Sandra Joyce, FireEye’s head of global intelligence, said that while APT38 is a criminal operation, it leverages the skills and technology of a state-backed espionage campaign, allowing it to infiltrate multiple banks at once and figure how to extract funds. On average, it dwells in a bank’s computer network for 155 days to learn about its systems before it tries to steal anything. And when it finally pounces, it uses aggressive malware to wreak havoc and cover its tracks.

“We see this as a consistent effort, before, during and after any diplomatic efforts by the United States and the international community,” said Joyce, describing North Korea as being “undeterred” and urging the U.S. government to provide more specific threat information to financial institutions about APT38’s modus operandi. APT stands for Advanced Persistent Threat.

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A security specialist works at a computer station with a cyberthreat map displayed on a wall in front of him in the Cyber Security Operations Center at AEP headquarters in Columbus, Ohio, May 20, 2015. VOA

Large Chile bank hacked

The Silicon Valley-based company says it is aware of continuing, suspected APT38 operations against other banks. The most recent attack it is publicly attributing to APT38 was against of Chile’s biggest commercial banks, Banco de Chile, in May this year. The bank has said a hacking operation robbed it of $10 million.

Also Read: The European Union Warns Facebook Over Consumer’s Data Usage

FireEye, which is staffed with a roster of former military and law-enforcement cyberexperts, conducted malware analysis for a criminal indictment by the Justice Department last month against Park Jin Hyok, the first time a hacker said to be from North Korea has faced U.S. criminal charges. He’s accused of conspiring in a number of devastating cyberattacks: the Bangladesh heist and other attempts to steal more than $1 billion from financial institutions around the world; the 2014 breach of Sony Pictures Entertainment; and the WannaCry ransomware virus that in 2017 infected computers in 150 countries. (VOA)