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

Myanmar Fighting Poses Dilemma for China

To gain some insight into conflict, VOA’s Steve Herman spoke with Min Zaw Oo, director of ceasefire negotiation and implementation at Myanmar Peace Center More

Australia Concerned Over Islamic State 'Brides'

Canberra believes there are between 30 and 40 Australian women who have taken part in terror attacks or are supporting the Islamic State terror network More

Recreational Marijuana Use Now Legal in Washington, DC

Law allows adults 21 and over to privately possess and smoke 0.05 kilogram of pot, and to grow small amounts of the plant 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.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More