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

Karzai's Legacy: Missed Opportunities?

Afghanistan's president leaves behind a much different nation than the one he inherited, yet his legacy from 13 years in power is getting mixed reviews More

Secret Service Chief Under Fire for White House Security Breach

Julia Pierson faces tough questions from lawmakers after recent intrusion at White House, says: 'It is clear that our security plan was not executed properly' More

Frustrated, Liberian Students Want Ebola Fight Role

Thousands have volunteered to go to counties, rural villages to talk to people in their language about deadly virus 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.
Malaysia Struggles to Stop People Joining Jihadi
X
Mahi Ramakrishnan
September 30, 2014 2:16 PM
Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Iran's Rouhani Skeptical on Syria Strikes

Iranian President Hassan Rouhani expressed skepticism Friday that U.S.-led airstrikes in Iraq and Syria could crush Islamic State militants. From New York, VOA’s Margaret Besheer reports the president was also hopeful that questions about Iran’s nuclear program could be resolved soon.
Video

Video US House Speaker: Congress Should Debate Authorization Against IS

As wave after wave of U.S. airstrikes target Islamic State militants, the speaker of the Republican-controlled House of Representatives says he would be willing to call Congress back into session to debate a formal, broad authorization for the use of military force. VOA’s Michael Bowman reports from Washington, where legislators left town 10 days ago for a seven-week recess.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Video

Video Ebola Robs Liberians of Chance to Say Good-Bye to Loved Ones

In Liberia, where Ebola has killed more than 1,500 people, authorities have worked hard to convince people to allow specialized burial teams to take away dead bodies. But these safety measures, while necessary, make it hard for people to say good bye to their loved ones. VOA's Anne Look reports on the tragedy from Liberia.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid