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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.

  • 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.

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U.S. President Donald Trump Announces Military Deal With India

Trump Announces Military Deal With India, Expresses Optimism For Trade Pact

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Donald Trump, Narendra Modi
President Donald Trump and Indian Prime Minister Narendra Modi shake hands during a "Namaste Trump," event at Sardar Patel Gujarat Stadium. VOA

By Steve Heman

President Donald Trump said Monday the United States will sign an agreement to sell $3 billion worth of U.S. helicopters and other equipment to India’s military.

The announcement came as Trump spoke at a welcome rally in the city of Ahmedabad, where a crowd of more than 100,000 people had gathered to hear from him and Indian Prime Minister Narendra Modi.

Ahead of the visit, Trump had said a new major trade deal between the two countries would not be part of this trip.  But in his address he promised the two countries will be making “among the biggest ever trade deals,” and said he is optimistic that he and Modi can reach “a good, even great deal” for both sides.

Modi also struck an optimistic note about a potential trade agreement, saying ties were expanding in spheres ranging from defense, the energy sector and information technology, and that a resurgent India would present new opportunities for the U.S.

Donald Trump, Narendra Modi
President Donald Trump, with first lady Melania Trump, pause as they tour the Taj Mahal. VOA

Calling the two countries “natural partners,” Modi said they can help bring peace, progress and security not just in the Indo Pacific region, but in the entire world.

“We are inspired by a long-term vision, not just short term considerations,” Modi said.

Modi hailed President Trump’s visit saying it marks a new chapter between the two countries. “India-U.S. relations are no longer just another partnership. It is a far greater and closer relationship,” the Indian leader said.

“There is so much that we share, shared values and ideas, shared spirit of enterprise and innovation, shared opportunities and challenges, shared hopes and aspirations,” according to Modi.

Trump began his address by uttering the Indian greeting “Namaste,” and said that India “will always hold a special place in our hearts.”

“America loves India.  America respects India.  And America will always be faithful and loyal friends to the Indian people,” Trump said.

He celebrated India as a successful democracy, and said both countries are committed to working together to fight terrorism.

“Our borders will always be closed to terrorists and terrorism and all forms of extremism,” Trump said.

Trump’s visit began with a red carpet-welcome at the airport in Ahmedabad, in Modi’s home state of Gujarat.  Thousands of people then cheered along a motorcade route as Trump and Modi traveled a short distance to a stop at Mahatma Gandhi’s ashram.

Pre-trip beautification effort

Donald Trump, Narendra Modi
U.S. President Donald Trump, first lady Melania Trump, and Indian Prime Minister Narendra Modi arrive at the new Motera cricket stadium. VOA

A small army of workers was deployed ahead of Trump’s visit to Ahmedabad to build a 400-meter-long wall along the motorcade route to block the view of where poor people live. The hurried beautification project also includes the placement of about 150,000 flowerpots.

After the stadium event in Ahmedabad and before heading to New Delhi, the president and first lady Melania Trump made a visit to the country’s most famous tourist attraction – the Taj Mahal – where they were given a tour of the site.

Indian media reported Agra will be on lockdown for the visit, although there is concern about controlling the menacing monkeys roaming the grounds of the 17th-century Mughal marble mausoleum.

“The forest department has been requested to ensure that the monkeys stay away from the Taj during Donald Trump’s visit,” Archaeological Survey of India Superintending Archaeologist Vasant Kumar Swarnkar was quoted telling India Today.

While Trump expressed his optimism for a trade deal, he said last week he was “saving the big deal for later on.”

There is mutual agreement on dozens of elements for the pact, but several contentious sectors are unresolved, including medical devices, according to sources close to the talks.

“Whether or not there will be an announcement on a trade package is, really, wholly dependent upon what the Indians are prepared to do,” a senior administration official told reporters on Friday. “That said, we have a number of significant commercial deals, which are of great significance that we’re very pleased to announce in a number of key sectors.”

Indian officials are said to be perplexed that U.S. officials halted trade negotiations just prior to the Trump visit, expressing a view that Washington pursued brinkmanship that failed in the face of a more patient India, which is the world’s fifth biggest economy.

“There’s no great hurry here” to finalize a trade pact, retired veteran senior Indian diplomat T.P. Sreenivasan in India told VOA.

“I was personally a little bit surprised that the two sides weren’t able to get this deal done,” Jeff Smith, South Asia research fellow at the Heritage Foundation, said.

Donald Trump, Narendra Modi
U.S. President Donald Trump and Indian Prime Minister Narendra Modi wave as they depart after a “Namaste Trump,” event. VOA

Bilateral talks

In India’s capital, bilateral talks are to focus on contemporary concerns.

Indian officials could raise Trump’s hard line on immigration.

“They view the immigration issue — whether it is offering visas to students or the H-1B highly skilled visas or the green card issue — as becoming worse in the last four years,” Pande told VOA.

It is uncertain whether Trump will discuss the issue of Kashmir.

Six months after Modi ended Kashmir’s special status under India’s constitution, local politicians there remain detained and internet service is restricted.

Trump “is not always very thoughtful when he talks about such issues, particularly Kashmir. So that’s a bee in his bonnet and it’s going to come up in some form,” Sreenivasan, a former Indian ambassador to the United Nations, predicted.

Pakistani Prime Minister Imran Khan has called for Trump to help resolve the dispute between the two nuclear-armed neighbors over Kashmir, something the U.S. president has previously indicated he is willing to do. But Modi has strongly rebuffed offers from third parties to mediate.

Indian officials are apprehensive about Trump commenting on the Kashmir issue during the visit.

“He might say that ‘I’m a great deal-maker and I can resolve Kashmir.’ But let’s hope he doesn’t,” Pande, of the Hudson Institute, said.

Some members of the U.S. Congress are also expressing concern about Modi’s controversial move to give Indian citizenship to immigrants from three neighboring countries — unless they are Muslims.

Trump, during the India visit, will raise such matters, particularly the religious freedom issue, which is extremely important to this administration,” according to a senior administration official.

“Attempts to lecture, coerce, punish, intervene in India’s affairs have traditionally not been particularly effective,” Smith, of the Heritage Foundation, said.

Trump will be the fourth consecutive U.S. president to travel to India, continuing the shift in allegiance by Washington to Delhi from India’s arch-rival and neighbor.

Khan, after a recent meeting with Trump during the World Economic Forum in Switzerland, said the U.S. president also promised to visit Pakistan soon.

Also Read- Realme Unveils First 5G Smartphone in India Named “X50 Pro 5G”

If “there is no complementary visit to Pakistan or no side agreement on some other way to assuage concerns there, then I think Pakistan will take it as a slight,” said Richard Russow, senior adviser for U.S.-India policy studies at the Center for Strategic and International Studies. (VOA)