News / Asia

India Rolls Out Bank Accounts for All

Indian Prime Minister Narendra Modi hands over a banking kit to an unidentified woman at the launch of a campaign aimed at opening millions of accounts for poor Indians in New Delhi, India, Aug. 28, 2014.
Indian Prime Minister Narendra Modi hands over a banking kit to an unidentified woman at the launch of a campaign aimed at opening millions of accounts for poor Indians in New Delhi, India, Aug. 28, 2014.
Anjana Pasricha

India has rolled out a massive project to give a bank account to every household in the country. The ambitious endeavor for financial inclusion aims to draw millions of poor people into a modern economy and reduce their dependence on money lenders.  
 
Hours before Prime Minister Narendra Modi formally launched the Project for People’s Wealth (Jan Dhan project) in New Delhi, banks enrolled about 15 million new account holders at thousands of camps held across the country.
 
Modi called it a campaign against “financial untouchability.”
 
He questioned how India could succeed in its battle against poverty if 40 percent of the country remains cut off from banking services. He said we must win freedom from “financial untouchability” by integrating all Indians into the economic system.  
 
The prime minister said it is ironic that a poor person pays huge rates of interest to borrow money from moneylenders while the rich can raise loans at lower rates of interest from banks.
 
Under the program, each new account holder gets a debit card, accident insurance coverage up to $1,600 and overdraft protection to about $80.
 
The landmark initiative aims to bring 70 million households, who have no bank accounts, financial services by January.
 
Commerce Minister Nirmala Sitharaman said this will transform the lives of many people.  
 
“I am sure the Pradhan Mantri Jan Dhan Yojana [Prime Minister Project for People’s Wealth] will touch the lives of everyone in a constructive and comprehensive way," said Sitharaman.
 
There are several reasons why so many Indians remain outside the banking system. Many poor people are unable to pay the $16 dollars most banks require as a minimum deposit. Millions of migrants to urban areas do not have identity papers needed to open an account. Vast swathes of the countryside are not covered by banking services.
 
Banks are promising to address the problems by branching out into rural areas and reducing the emphasis on formal documentation required for opening a new account.
 
Economists say financial inclusion is important for India’s transformation into a modern economy. It could ensure that more household savings enter the formal financial system - at the moment about one third of savings are channeled into gold jewelry or bars, especially in rural areas with poor banking services.  
 
The project could also cut graft by making it possible to pay welfare benefits such as food and fuel subsidies directly into bank accounts.
 
Most importantly, it could reduce the dependency of poor households on moneylenders who offer loans at crippling interest rates.
 
The drive for financial inclusion is not new. Previous governments have attempted it, but made little progress. It remains to be seen how the latest drive will fare.
 
Director of the Centre of Equity Studies in New Delhi, Harsh Mander, says lack of banks in rural areas has been a great stumbling block and could still pose a hurdle.
 
“Banks very often find this a burden and financially unviable, so they do this very reluctantly, they make people come multiple times," said Mander. "100 percent financial inclusion should be a goal we set out, but we first need to create an infrastructure which ensures that there is a financial institution within three kilometers away of every habitation before this even becomes a feasible idea.”
 
Prime Minister Modi, who announced the program for financial inclusion in a nationwide Independence Day address two weeks ago, has made it an important goal for his government.
 
Observers say the program’s implementation could test his reputation as a man who can deliver results.

You May Like

US Border Patrol Union Accused of Taking Sides on Immigration

Report alleges agents leaking info to immigration opponents, appearing at their private events; Center for Immigration Studies director defends agents' actions More

Video Blind Somali Journalist Defies Odds in Mogadishu

Reporting from Somali capital for past decade, Abdifatah Hassan Kalgacal has been working at one of Mogadishu's leading radio stations covering parliament More

Video Rights Monitor: Hate Groups' Use of Internet to Inflame, Recruit Growing

Wiesenthal Center's Abraham Cooper says extremists have become skilled at celebrating violence, ideology on Web More

This forum has been closed.
Comment Sorting
Comments
     
by: mbennett from: USA
August 28, 2014 3:18 PM
Bravo India.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Hate Groups Spread Influence Via Interneti
X
Mike O'Sullivan
June 30, 2015 8:20 PM
Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Syrians Flee IS Advance in Hasaka

The Syrian government said Monday it has taken back one of several districts in Hasaka overrun by Islamic State militants. But continued fighting elsewhere in the northern city has forced thousands of civilians from their homes. In this report narrated by Bill Rodgers, VOA Kurdish Service reporter Zana Omer describes the scene in Amouda, where some of the displaced are taking refuge.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video S. Korea Christians Protest Gay Rights Festival

The U.S. Supreme Court decision mandating marriage equality nationwide has energized gay rights supporters around the world. Gay rights remain a highly contentious issue in a key U.S. ally, South Korea, where police did a deft job Sunday of preventing potential clashes between Christian protesters and gay activists. Kurt Achin reports from Seoul.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video Nubians in Kenya Face Land Challenges

East Africa's ethnic Nubians have a rich cultural history that dates back thousands of years, but in Kenya they are facing hardships, including the loss of lands they have lived on for generations. They say the government has reneged on its pledge to award them title deeds for the plots. VOA's Lenny Ruvaga reports.
Video

Video Military Experts Question New Russian Tank Capabilities

Russia has been showing off its new tank design – the Armata T-14. Designers claim it is 20 years ahead of current Western designs - and driving it feels like playing a computer game. But military analysts question those assertions, and warn the cost could be too heavy a burden for Russia’s struggling economy. Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.
Video

Video In Syrian Crisis, Social Media Offer Small Comforts

Za’atari, a makeshift city in Jordan, may be the only Syrian refugee camp to tweet its activities, in an effort to keep donors motivated as the war in Syria intensifies and the humanitarian crisis deepens. Inside the camp, families say mobile phone applications help hold together families that are physically torn apart. VOA’s Heather Murdock reports.

VOA Blogs