A journey towards fincial inclusion & security
By Archa Datta
Our country face the biggest challenge of providing banking facilities and insurance coverage to all. Having access to institutiol fince has so far remained a far cry to a vast chunk of rural population.
The Pradhan Mantri Jan Dhan Yoj (PMJDY), with its benefits of life insurance, loan opportunities and mobile banking facilities, is a major step to bring people across the country closer to institutiolized fince, and save them from the clutches of informal finciers. India’s rural poor will now be able to meet their diverse fincial needs like savings, credit and insurance against unexpected events through a well- established system.
The scheme, launched in August, 2014, so far ebled (till 3rd January 2015), opening of 1064 lakh new bank accounts, yielding deposits of Rs 836905.50 lakh, as per Economic Survey, 2014-15. Under the scheme, the public sector banks are supposed to open 7.5 crore accounts in a year in the phase-I of the program. The remaining people will be covered over a period of next 2-3 years.
Along with lack of access to institutiol fince, the other grim reality of the Indian economy is that a large number of people is deprived of any kind of insurance coverage be it for health, accidents or life. Insurance is a way of maging risks. People need insurance for a variety of reasons. In some cases insurance is required by law; however, there are policies that, though not mandatory to have, but do give necessary protections in case of fincial loss. When one has an insurance policy, certain rights and protections are derived out of it to the person insured and his family.
The budget 2015-16, has proposed, three Social Security Schemes, Pradhan Mantri Suraksha BimaYoj, Atal PensionYoja and Pradhan Mantri Jeevan Jyoti Bima Yoja. These three social security schemes, on Jan Dhan platform, is to protect an Indian citizen against illness, accidents, or penury in old age.
Pradhan Mantri Suraksha Bima Yoja( PMSBY), is to ensure risk coverage in case of accidental death, full or partial disability. The insured amount for accidental death and full disability is Rs 2 lakh and it is Rs 1 lakh for partial disability. It has an annual premium of Rs 12 only, which will be directly auto-debited by the bank from the subscriber’s account. It is the only mode of paying the premium and thus creates a linkage between the beneficiary and the bank. A person has to opt for the scheme every year by submitting a simple form to the bank by 1st June. One can also opt for the scheme on a long term basis and in that case his account will be auto-debited every year by the bank. People between the age of 18 and 70 years, having an Aadhar linked bank account, are eligible for the scheme.
The scheme is offered to all Public Sector General Insurance Companies and other willing insurers who are ready to tie up with banks for this purpose. It has the provision for Government contribution, by which various Ministries can co- contribute premium for beneficiaries of different categories from their budget or from the Public Welfare Fund, created in the budget 2015-16, out of unclaimed money.
Pradhan Mantri Jeevan Jyoti Bima Yoj( PMJJBY), is to benefit people in case of death for any reason. It is available to people in the age group of 18 to 50, having a bank account. People who join the scheme before completing the age of 50, can continue to have the risk of life cover up to the age of 55 years, subject to the payment of premium. The scheme has an annual premium of Rs 330, with a risk coverage of Rs 2 lakh. The premium will be directly auto- debited by the bank from the subscriber’s account. A person can opt for the scheme for a year or prefer to continue it as a long term option. In case of long term option, his account will be auto- debited every year by the bank.
Life Insurance Corporation and other willing life insurers with a tie-up with the bank are to implement the scheme. The scheme also has the provision for co-contribution of premium by various Ministries for different categories of their beneficiaries out of their budget or out of Public Welfare Fund created in the Budget 2015-16 from the unclaimed money.
The Government of India’s concern for old age income security for the working poor, particularly in the unorganised sector, resulted in the creation of a new initiative in the budget proposals 2015-16, called, Atal Pension Yoja (APY). It is to encourage the uninsured workers in the unorganised sector to come under tiol Pension System (NPS), under Pension Fund Regulatory and Development Authority (PFRDA).
The scheme meant to persuade workers in unorganised sector, who form 88% of total workforce, to save voluntarily for the retirement. It is the improved version of Swavalamban scheme, launched in 2010-11, which has been found lacking in clarity with regard to pension benefits at the age after 60. Under the APY, the subscribers would receive the fixed pension of Rs. 1000 per month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, Rs. 5000 per month, at the age of 60 years, depending on their contributions, which itself would vary depending on the age of joining the APY.
The scheme is open to all bank account holders who are not members of any statutory social security scheme. The minimum age of joining you APY is 18 years and the maximum is 40 years. Hence, the minimum period of contribution by any subscriber is 20 years or more. All bank account holders under the eligible category can join APY with auto-debit facility to accounts, which will lead to reduction in contribution collection charges.
The scheme is mainly targeted at unorganised sector workers.The existing subscribers of Swavalamban Scheme will be automatically migrated to APY, unless they opt out of the scheme.The Government would provide fixed pension guarantee for the subscribers, and would co-contribute 50% of the subscriber’s contribution or Rs. 1000 per annum, whichever is lower, to eligible subscribers.The APY is being launched from 1st June, 2015.
Jan Dhan Mission is set to provide universal banking coverage across all the six lakh villages of the country, by providing at least one Basic Banking Account, per household. It is to provide all households in the country, both rural and urban, access to multiple fincial services, like bank account with RuPay Debit card, access to credit, remittance, Insurance and Pension. Thus, the Mission not only brings the excluded sections from the society into the fincial mainstream but makes the transfer of benefits of various subsidy schemes of the government more efficient. It is the first step to bring in economic equality and remove fincial untouchability.
In order to achieve the goal of universal social security system, especially for the poor and the under- privileged, the three- tier social security schemes, announced in the current year budget, is definitely going to spread the safety net of protection to people in all strata of life against deprivation and uncertainties. They are the steps towards ensuring fincial security and long term sustence to families when the earning family member retires, dies or suffers full or partial disability.
Thus, Jan Dhan to Jan Suraksha, is all about guaranteeing fincial inclusion and fincial security, prerequisites for inclusive growth and all round development.
(Archa Datta is currently Freelance writer and former DG, DD News and DG, NSD, AIR.)