The Telegraph
Monday , August 11 , 2014
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Inclusion plan disputes diminish

New Delhi, Aug. 10: The NDA government’s ambitious financial inclusion plan, which seeks to open at least 15 crore bank accounts for 7.5 crore unbanked families by 2018, is being given the final touches.

Prime Minister Narendra Modi is expected to unveil the plan on August 15 when he addresses the nation.

The financial inclusion project — Sampoorn Vitteya Samavesh — aims to empower the weaker sections of the society.

“We are in discussions with the finance ministry. There is no difference of opinion between us,” RBI governor Raghuram Rajan told reporters after finance minister Arun Jaitley addressed the apex bank’s board here today.

These remarks come at a time the RBI is reportedly not in favour of immediately providing an overdraft facility of Rs 5,000 to all the new basic accounts as part of this inclusion drive. PSU banks also want an overdraft to be provided selectively, and that too, only after studying the activity of the accounts.

The RBI is understood to have conveyed to the finance ministry that it is not in favour of a credit guarantee fund (with a corpus of Rs 5,000 crore) to give comfort to banks to provide such overdrafts.

The financial inclusion plan seeks to provide basic banking accounts with a RuPay debit card, which will have an in-built accident insurance cover of Rs 1 lakh.

After the first year of operation, the account will become eligible for an overdraft facility of Rs 5,000.

The second phase will run for three years up to August 15, 2018. It will focus on micro-insurance and pension schemes such as “Swavlamban” for the unorganised sector. In this phase, the government will also set up a credit guarantee fund to cover defaults on the Rs 5,000-overdraft facility that will be available to the lady of the house.

Intermediaries such as business correspondents are likely to be engaged to provide banking services.

Jaitley has said the funds for the programme will come from the sale of the government’s stake in some public sector banks. The proceeds will be put back into the system to ensure that banking reaches each and every village.

The reach of the banking system is just 58 per cent. Of the country’s total bank network of 1,15,082 branches, only 43,962 branches, or 38.2 per cent, are in rural areas.