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

Video In US, Columbus Day Still Generates Controversy

Holiday marks date Columbus discovered Americas, but some are offended by legacy because he enslaved many natives he encountered More

Video Through Sports, Austria Tries to Give Migrants Traction

With 85,000 people expected to claim asylum in Austria this year, its government has made integration through joint physical activities a key objective More

Video Kickboxing Champion Shares Sport With Young Migrants

Pouring into Europe by hundreds of thousands, some migrants, especially youngsters, are finding sports a way to integrate into new host countries More

This forum has been closed.
Comment Sorting
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.
Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemeni
Henry Ridgwell
October 12, 2015 4:03 PM
The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemen

The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video No Resolution in Sight to US House Speaker Drama

Uncertainty grips the U.S. Congress, where no consensus replacement has emerged to succeed Republican House Speaker John Boehner after his surprise resignation announcement. Half of Congress is effectively leaderless weeks before America risks defaulting on its national debt and enduring another partial government shutdown.

Video New Art Exhibit Focuses on Hope

Out of struggle and despair often comes hope. That idea is behind a new art exhibit at the American Visionary Art Museum in Baltimore, Maryland. "The Big Hope Show" features 25 artists, some of whom overcame trauma and loss. VOA’s Deborah Block reports.

Video Columbus Day Still Generates Controversy as US Holiday

The second Monday of October is Columbus Day in the United States, honoring explorer Christopher Columbus and his discovery of the Americas. The achievement is a source of pride for many, but for some the holiday is marked by controversy. Adrianna Zhang has more.

Video Anger Simmers as Turks Begin to Bury Blast Victims

The Turkish army carried out new air strikes on Kurdistan Workers Party (PKK) targets on Sunday, a day after the banned group announced a unilateral cease fire. The air raids apparently are in retaliation for the Saturday bombing in Turkey's capital Ankara that killed at least 95 people and wounded more than 200 others. But as Zlatica Hoke reports, there are suspicions that Islamic State is involved.

Video Bombings a Sign of Turkey’s Deep Troubles

Turkey has begun a three-day period of mourning following Saturday’s bomb attacks in the capital, Ankara, that killed nearly 100 people. With contentious parliamentary elections three weeks away, the attacks highlight the challenges Turkey is facing as it struggles with ethnic friction, an ongoing migrant crisis, and growing tensions with Russia. VOA Europe correspondent Luis Ramirez reports.

Video Afghanistan’s Progress Aided by US Academic Center

Recent combat in Afghanistan has shifted world attention back to the central Asian nation’s continuing civil war and economic challenges. But, while there are many vexing problems facing Afghanistan’s government and people, a group of academics in Omaha, Nebraska has kept a strong faith in the nation’s future through programs to improve education. VOA’s Greg Flakus has more from Omaha, Nebraska.

Video House Republicans in Chaos as Speaker Favorite Withdraws

The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video German, US Officials Investigate Volkswagen

German officials have taken steps to restore some of the reputation their car industry has lost after a recent Volkswagen diesel emissions scandal. Authorities have searched Volkswagen headquarters and other locations in an effort to identify the culprits in the creation of software that helps cheat on emission tests. Meanwhile, a group of lawmakers in Washington held a hearing to get to the bottom of the cheating strategy that was first discovered in the United States. Zlatica Hoke reports.

Video Why Are Gun Laws So Hard for Congress to Tackle?

Since taking office, President Barack Obama has spoken out or issued statements about 15 mass shootings. The most recent shooting, in which 10 people were killed at a community college, sparked outrage over the nation's gun laws. But changing those laws isn't as easy as many think. VOA's Carolyn Presutti reports.

Video In 'He Named Me Malala,' Guggenheim Finds Normal in Extraordinary

Davis Guggenheim’s documentary "He Named Me Malala" offers a probing look into the life of 18-year-old Malala Yousafsai, the Pakistani teenager who, in 2012, was shot in the head by the Taliban for standing up for her right to education in her hometown in Pakistan's Swat Valley. Guggenheim shows how, since then, Malala has become a symbol not as a victim of brutal violence, but as an advocate for girls’ education throughout the world. VOA’s Penelope Poulou has more.

Video Paintable Solar Cells May Someday Replace Silicon-Based Panels

Solar panels today are still factory-manufactured, with the use of some highly toxic substances such as cadmium chloride. But a researcher at St. Mary’s College, Maryland, says we are close to being able to create solar panels by painting them on a suitable surface, using nontoxic solutions. VOA’s George Putic reports.

VOA Blogs