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Showing posts with label Prime Minister. Show all posts
Showing posts with label Prime Minister. Show all posts

Monday, 26 December 2016

08:42

PM Narendra Modi on Mann ki Baat: Go cashless, get cashback

PM Narendra Modi on Mann ki Baat: Go cashless, get cashback

PM Narendra Modi defends frequent changes in demonetisation rules, says these are being done to reduce people's problems.

In an effort to push consumers and traders towards embracing digital transactions, Prime Minister Narendra Modi Sunday announced the launch of two schemes — Lucky Grahak Yojana and Digi-Dhan Vyapar Yojana. For the next 100 days, starting today, 15,000 people making digital payments will get Rs 1,000 cashback in a daily lucky draw, PM Modi said. He added that there will also be a weekly draw and the prize money will run into lakhs. “A bumper draw will be held on BR Ambedkar’s birthday,” PM Modi said. Under the two schemes, the lucky draw will take place in 100 cities across the country. Traders adopting digital payment methods will get a tax rebate under the Digi-Dhan Vyapar Yojana scheme.
The prime minister was speaking in his monthly radio address to the nation ‘Mann ki Baat’. The prime minister also elucidated why RBI has been frequently updating and issuing fresh guidelines. “Government is taking regular feedback from people and it is alright to make changes according to it ,” he said.
He also said that out of the 30 crore debit/credit cards in the country, 20 crore of these are held by those belonging to lower and middle-income background. “In last few days, cashless transactions have gone up by 200-300 per cent. To give it a push, government has taken a big step,” he said.
Exemplifying the benefits of cashless transactions, PM Modi asserted that they will help in ending the exploitation faced by workers in the informal sector. “In our country, the informal sector is quite big and most of the workers are paid their wages in form of cash. They also face exploitation because of this. Now digital transactions are helping these workers,” said PM Modi.
Speaking on why political parties will not come under the scrutiny of tax authorities for cash deposits in demonetised currency, PM Modi said that he wanted a discussion in Parliament regarding party funding, but the Opposition “did not let the Houses run”. “People are spreading rumours that political parties have free hand but this is not true,” PM Modi said.
The Prime Minister, however, lauded both Lok Sabha and Rajya Sabha for passage of the Disabilities Bill to secure the rights of disabled and also their honour and dignity. The new law, he said, is in consonance with the spirit expressed by the United Nations.
Terming this war against corruption as “an extraordinary one”, he said the forces involved in “this murky enterprise of perfidy and corruption” have to be defeated as they are devising new tactics to thwart government’s efforts every day. “To counter these new offensives, we too have to devise appropriate new responses and anti-dotes. When the opponents keep on trying out new tactics, we have to counteract decisively since we have resolved to eradicate the corrupt, shady businesses and black money,” he said.
Lauding the public for their support in exposing the wrong-doings of some, who are devising “newer wily ways and means” to counter the fight against corruption, the Prime Minister sought more public support. “Everyday many new people are being taken into custody, currency notes are being seized, raids are being carried out. Influential persons are being caught. The secret is that my sources of such information are people themselves.
“Information being received from common citizens is many times higher than that being obtained through government machinery,” he said, adding that people were taking risks to expose such elements. He asked them to share such information on e-mail address of the government as also on the MyGov App.
Modi also talked about the Benami Property law that came into being in 1988, but neither its rules were framed, nor was it notified and laid dormant for years. “We have retrieved it and turned it into an incisive law against ‘Benami Property’. In the coming days, this law will also become operational. For the benefit of the nation, for the benefit of the people, whatever needs to be done will be accorded our top priority,” he said.
He also wished the people on Christmas and remembered former Prime Minister Atal Behari Vajpayee on his birthday while wishing him good health and long life. Modi also congratulated the Indian Cricket team for its emphatic 4-0 victory over England, as also the performances of some young players like Karun Nair who scored a triple century, K L Rahul for scoring a brilliant 199, besides the leadership provided by Captain Virat Kohli and off-spin bowler R Ashwin. He also complimented the Junior Hockey Team for lifting the World Cup and the Indian Women’s Hockey Team that won the Asian Champions Trophy.



Saturday, 3 December 2016

19:57

History of Demonetisation

History of Demonetisation
This is not the first time the Indian governments has demonetised currency notes. RBI first demonetized Rs1,000 and Rs 10,000 banknotes  in January 1946. Banknotes for Rs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in 1954. However,  Rs 1,000, Rs 5,000 and Rs 10,000 were once again demonetised  in January 1978 once again. In 1978 the then Government said the move was aimed tackling the issue of the black money which had grown to large proportions at that time. The measure was enacted by passing the  High Denomination Bank Note (Demonetisation) Act, 1978. The law’s preamble said that this was  an Act to provide in the public interest for the demonetisation of certain high denomination bank notes and for matters connected therewith or incidental thereto.

However, Rs 1,000 was big money in those days, clerks earned Rs 200-300, most officers earned between Rs 500- 1500 and even President of India earned a mere Rs 10,000, while Managing Directors of even the largest corporation earned just Rs 5,000. Most Indians in those days had never seen such a note in their lifetime. 

Why was the decision taken ?
Prime Minister Mr Modi had promised to combat the menace of black money when he came to power two-and-half years back,  pledging to crack down on parallel economy  in india which has seen tax to GDP ratio being abnormally low. While the Indian economy grew by 30 % during 2011 and 2016, the circulation of money in the economy increased by 40 %. However circulation of Rs 500 notes increased by

76 % and of Rs 1000 notes by an astounding 109 %. Which means the demand for high denomination notes grew at a faster rate, causing suspicion that much of this was being hoarded as black money. 

“This measure was necessary to maintain the financial integrity of our economy,” said Secretary Economic Affairs Shaktikanta Das. Demonitisat-ion is a move which had been suggested by several quarters. 

The move will also check fake note flows, a bane which has been dogging the Indian financial markets for years. The Reserve Bank said while the Indian currency’s security features have not “been breached”, the fake notes being pushed by Pakistan’s spy agencies were similar to legal tender and were causing confusion in the market. Currently there are 16.5 billion legal Rs500 notes and 6.7 billion Rs1000 notes. But estimates point to larger numbers of high denomination notes circulating in the market, clearly pointing to fake currency being pushed into india in large numbers.

The  Government’s decision to demonetise Rs 500 and Rs1,000 currency notes will also push India towards a cashless economy. “This one decision will change the way the people spend and keep their money,” asserted Finance Minister Mr Arun Jaitley. India has been trying to push the country’s cash dependent economy towards paperless transactions. It published a draft paper of sops and incentives, which may be considered for those opting for online and plastic payments. However, the move has remained nascent at best till now. 

High-denomination banknotes account for 86 % of the 1,64,000  crore rupees of currency in circulation. With inflation raising prices, most people preferred higher denomination notes. However, by now taking steps to discourage high value notes, the government could push more people to opt for e-commerce and plastic money. Analysts believe the move to scrap high denomination notes will now force people to use their accounts and financial technology for transactions. Estimates say the mobile commerce market in India will grow from a current $2 billion to $19 billion by 2019. 

Officials point out that studies by McKinsey suggest large-scale adoption of digital finance by emerging economies could boost their GDP by up to 6 % The study says “India could see a boost of $700 billion, an 11.8% increase by 2025. This additional GDP could create up to 21 million.”  The idea is to move society towards electronic transactions and away from cash, as this helps us monitor money flow and check black money. 

Real Estate
Real estate sector, particularly property resale market, is expected to take a hit because of the decision. With large caches of black money eliminated, black money deals are expected to reduce in the realty sector. This is expected to bring down prices of property and bring about transparency in the industry which unfortunately has earned a dubious reputation of being flush with  black money.  According to an expert, prices coming down to more reasonable levels in the housing market cannot be ruled out. In the immediate future, the sector will be under serious pressure with volume and number of transactions in residential and land markets seeing a substantial downward trend.

The author is a senior journalist based in New Delhi. Views expressed are personal

Source:Employment News

Thursday, 1 December 2016

19:08

Supply of LPG continues to be in the exempted category for payment through old Rs. 500 bank notes >Dec 2,2016

Supply of LPG continues to be in the exempted category for payment through old Rs. 500 bank notes >Dec 2,2016

With effect from the midnight of 2nd December, 2016, old Rs. 500 bank notes will not be accepted at petrol, diesel and gas outlets of Public Sector Oil and Gas Marketing Companies as well as for purchase of Air Tickets at Airports; However, supply of LPG continues to be in the exempted category for the purpose of payment through old Rs. 500 bank notes. 

After the cancellation of legal tender character of old Rs. 500 and Rs. 1000 denomination bank notes, the Government had exempted certain categories of transactions wherein the old high denomination bank notes were accepted. The Government had extended the exemption period for these categories from time to time. At present, exemptions are allowed on certain types of transactions wherein payment of old Rs. 500 bank notes are permitted up to a specified date.

The processes of production, dispatch and distribution of currency notes have been continuing and more cash is flowing into the system steadily. The digital transactions have also made an impressive progress and are expected to significantly improve during the coming days. Now, therefore, as digital transaction options have been increasing across different sections of the economy, it has been observed that the outlets of the oil and gas marketing companies are better equipped to accept payments through digital means. Hence, it has been decided that with effect from the midnight of 2nd December, 2016, petrol, diesel and gas outlets of Public Sector oil and gas marketing companies will be removed from the exempted category for receipt of old Rs. 500 bank notes. It may be noted that supply of LPG continues to be in the exempted category for payment through old Rs. 500 bank notes.

Similarly, purchase of air tickets at the airports was included initially in the exempted category. It is observed that air ticketing counters have facilities to accept non cash/digital payments. Further, enough time has been allowed for travelers to be prepared with legal tender and/or non cash modes of payment. It has, therefore, been decided that with effect from midnight of 2nd December, 2016, the exemption allowed for purchase of air tickets at airports through old Rs. 500 notes will be removed from the exempted category.

The other exempted categories that have earlier been notified will continue to accept old Rs. 500 notes as per the said notifications.

Source:PIBNEWS


Tuesday, 29 November 2016

08:51

Central Government and Reserve Bank Of India Taken Measures after announcement of Demonitization Of Rs 500 and Rs.1000

Central Government and Reserve Bank Of India Taken Measures after announcement of Demonitization Of Rs 500 and Rs.1000

Prime Minister Narendra Modi shocked the country on November 8 by abolishing Rs 500 and Rs 1,000 notes, which accounted for 86% of the cash in circulation. The move was aimed at cracking down on the shadow economy, but has brought India’s cash economy to a virtual standstill.

The government and the Reserve Bank of India have since taken a slew of measures to ease the pain from its measures. They are detailed below in chronological.

November 25

- RBI says old currency notes can be exchanged at RBI branches.

November 24

- Government stops over the counter exchange of old banknotes; can only be deposited.

- Government to ensure adequate cash supply for pensioners, armed forces personnel.

- Allows certain payments in old Rs 500 notes including at tolls, hospitals for limited time.

November 23

- The government says will offer Rs 210 bn rupees in farm credit to farmers

November 22

- RBI sets balance kept in prepaid wallets, cards (PPIs) at 20,000 rupees from 10,000 til Dec 30

- Merchants can transfer up to 50,000 rupees from PPIs to banks til Dec 30

- Monthly limits on transactions via PPIs raised to 20,000 rupees for 10,000 til Dec 30

- RBI asks state-run Nabard to disburse up to 230 bn rupees for crop loans.

November 21

- The RBI allows cash withdrawal of up to Rs 2,50,000 rupees for wedding-related expenses.

- The RBI allows farmers to withdraw up to Rs 25,000 rupees a week from their loan, deposit accounts.

- The RBI gives small borrowers 60 more days before loans of up to Rs 10 mn are marked substandard.

- The government allows farmers to purchase seeds from state-run outlets with old Rs 500 notes.

November 18

- The RBI sets limit of cash withdrawal at card swiping machines at Rs 2,000 per day.

November 17

- The government allows farmers to withdraw up to Rs 25,000 a week against the crop loans.

- The government extends time limit for farmer to pay crop insurance premiums by 14 days.

- Cuts limit for over-the-counter exchange of old bills at banks to Rs 2,000 from Rs 4,500.

November 15

- The government says banks must use indelible ink to ensure people change cash only once.

November 14

- The government extends deadline for payments in old notes including for petrol for limited time.

November 13

- The RBI raises cap on weekly cash withdrawals from banks to Rs 24,000 from Rs 20,000.

- Removes per-day withdrawal limit cap of Rs 10,000.

- Raises limit for over-the-counter exchange of old bills at banks to Rs 4,500 from Rs 4,000.

- Waives ATM fees for all transactions by savings bank customers til December 30.

- The government increases withdrawal limits at recalibrated ATMs to Rs 2,500 per day from Rs 2,000.

November 11

- Extends deadline for payments in old notes including for petrol for limited time.

November 8

- India abolishes Rs 500, Rs 1,000 notes in fight against black money.

- Rs 500, Rs 1000 notes must be tendered into banks, RBI by December 30.

- Caps exchange of old bills over-the-counter at banks at Rs 4,000.

- Caps cash withdrawals from bank accounts at Rs 10,000 per day till November 24.

- Caps cash withdrawals from bank accounts at Rs 20,000 per week till November 24.

- Caps cash withdrawals from ATMs at Rs 2,000 per day per card till November 18.

- Caps cash withdrawals from ATMs at Rs 4,000 per day per card from November 19.

- Allows certain payments in old notes including for petrol for limited time.

Friday, 18 November 2016

12:38

In the aftermath of the cancellation of the legal tender character of the old Rs. 500 and Rs. 1000 notes -..certain operational aspects of this scheme have been taken:

In the aftermath of the cancellation of the legal tender character of the old Rs. 500 and Rs. 1000 notes -..certain operational aspects of this scheme have been taken:

New Delhi, November 17, 2016
Kartika 26, 1938
In the aftermath of the cancellation of the legal tender character of the old Rs. 500 and Rs. 1000 notes, the Government of India has been receiving several suggestions including thosefrom the State Governments. The Government has considered various suggestions and the following decisions relating to certain operational aspects of this scheme have been taken:
i. We are now at the beginning of the Rabi season. The farmers need various inputs for their agricultural activities. While the Government is keen on promoting payment through the banking or digital system, it is felt necessary to make some quantum of cash available with farmers to meet various expenses in connection with agricultural operations. It has, therefore, been decided that farmers would be permitted to draw upto Rs. 25000/- per week in cash from their KYC compliant accounts only. These cash withdrawals would be subject to the normal loan limits and conditions. This facility will also apply to the Kisan Credit Cards (KCC).
ii. Farmers are currently selling their produce from the Kharif season in the APMC markets/mandis. The farmers who receive such payments in their bank accounts through
cheque/ RTGS will be permitted to draw up to Rs. 25000/- per week in cash. These accounts will have to be KYC compliant. This facility will enable the farmers to meet
their various expenses connected with agriculture. This will also infuse lot of liquidity into the rural sector.
iii. Traders registered with APMC markets/mandis will be permitted to draw up to Rs. 50,000/- per week in cash from their KYC compliant accounts as in the case of business entities. This will enable these traders to pay wages and facilitate easy loading, unloading and other activities at the mandis.
iv. For payment of crop insurance premium, States fix time limits depending on their local requirements and conditions. Consequently, the last date for payment expires on different dates. It has now been decided to extend the last date for payment of crop insurance premium by 15 days. 
v. While encouraging families to incur wedding expenses through cheques or digital means, it has been decided to permit families celebrating weddings to draw up to Rs. 2,50,000/- in cash from their own bank accounts. These accounts have to be necessarily KYC compliant. The amounts can be drawn only by either of the parents or the person getting married. Only one of them will be permitted to draw this amount. This limit of Rs.  2,50,000/- will apply separately to the girl’s family and the boy’s family. The person drawing such amount has to furnish the PAN details. Further, a self-declaration will have
to be submitted by the person to the effect that only one person from his/her family is drawing the amount. It is expected that members of the public will fully cooperate to
ensure that the above guidelines are adhered to. Any misuse of this facility will invite appropriate action based on the self-declaration and other details.
vi. At present, over the counter exchange of old Rs. 500/- and Rs. 1000/- notes is limited up to maximum of Rs. 4500/- per person. Reports have been received that the same persons are going back to the counter again and again, thereby cornering the facility and depriving many other people from exchanging old notes. There are also reports oforganized groups indulging in such practices to convert their black money into white. It is now expected and desirable that people put their old notes into their bank accounts.However, for convenience of the people who may be on temporary visit either for work or otherwise, it has been decided to reduce this limit of exchange of old Rs. 500/- and Rs.1000/- notes across the counter in banks from Rs. 4500/- to Rs. 2000/-. This facility will be available only once per person. The reduced limit of Rs. 2000/- will take effect from18th November, 2016.
vii. Central Government employees up to Group `C’ including equivalent levels in the Defence and Para Military Forces, Railways and Central Public Sector Enterprises will be
given an option to draw salary advance up to Rs. 10,000/- in cash. This amount will be adjusted in their salary for November, 2016. It is expected that this decision will ease the
pressure on the banks. 

Source:Finmin

Monday, 14 November 2016

22:27

Temporary Operational Changes in Limits and Waive Charges -Ministry Of Finance

Temporary Operational Changes in Limits and Waive Charges,

E-Payments :
  • All Central Government Departments and Public Sector Enterprises are being instructed to use the method of e-payments to the maximum extent possible.
  • RBI has advised National Payments Corporation of India (NPCI) to waive its      transaction charges on transactions settled through National Financial Switch(NFS) till 31st December, 2016.
  • Banks are also being advised to waive similar charges currently levied by them.

Limits of Withdrawal Enhanced
  • The withdrawal limit of Rs.20,000/- per week has been enhanced to Rs.24,000/-. The withdrawal limit of Rs.10,000/- per day has been removed.
  • The limit of Rs.4000/- for over the counter exchange against old Rs.500/- and Rs.1000/- notes has been increased to Rs.4500/-. This will enable the Banks to
  • give lower denomination notes for Rs.500/- while dispensing the remaining Rs.4000/- through Rs.2000/- notes.
  • The ATMs are progressively getting recalibrated. As and when they are recalibrated, the cash limit of such ATMs will stand enhanced to Rs.2500/- per
  • withdrawal. This will enable dispensing of lower denomination currency notes for about Rs.500/- per withdrawal. Other ATMs which are yet to be recalibrated,
  • will continue to dispense Rs.2000/- till they are recalibrated.
  • Business entities having Current Accounts which are operational for last three months or more will be allowed to draw Rs.50,000/-per week. This can be done 
  • in a single transaction or multiple transactions. This will enable the small business entities to pay wages to their workers and make sundry payments.
  • Adequate cash will be made available with District Central Cooperative Banks (DCCBs) to facilitate withdrawal from existing accounts. The cash withdrawal limits for Banks will apply in case of DCCBs also.

The above measures would substantially enhance the reach of the banking system to exchange notes and facilitate cash withdrawal from bank accounts.

Thursday, 5 May 2016

08:35

Twenty Crore Bank Accounts Opened: Where Does Jan Dhan Yojna go from here??

Twenty Crore Bank Accounts Opened: Where Does Jan Dhan Yojna go from here??

From San Jose to Wembley Stadium, there are very few people that haven’t heard of Prime Minister Narendra Modi’s massive financial inclusion project, the Jan Dhan Yojana (JDY) initiative.
On August 15, 2014, Modi announced his mission to make banking facilities available to all households in India, which would go onto become a key fixture of his development ‘JAM’ policy. Less than six months later, over 11.5 crore bank accounts were opened (1.5 crore accounts after just a week), a feat that apparently made its way into the Guinness Book of World records.
A little over a year later – as of April 20, 2016 – the numbers appear to speak for themselves. Nearly ww crore (220 million) accounts have been opened so far, with the total deposits amounting to a little over 36,700 crore rupees. Last weekend, in a speech at Varanasi, Modi pointed out how JDY was helping the “poor battle poverty”. “Our experience during Jan Dhan Yojana brought out the richness of the poor,” he said.
Has the government’s massive push towards financial inclusion been successful? How much should we worry about duplication and zero-balance accounts? Will the bank mitra/bank correspondent model work now that they need to focus on transactions rather than enrollment? And, is JDY better viewed as a platform for Aadhaar-based transfers rather than a meaningful attempt bringing banking services to the poorest of the poor? The Wire breaks it down.
What is JDY and how should we place it in the larger quest for financial inclusion?
The project’s ambition and implementation are perhaps unprecedented. While the history of financial inclusion dates back to 1969, when the nationalisation of banks took place, the JDY has on paper carried out the most exhaustive financial inclusion process to date. Its initial goal of opening one bank account per Indian household was achieved (again, on paper) in January, 2016.
The idea of pushing people to sign up for zero-balance accounts, however, isn’t new. In 2005, the Reserve Bank of India and the UPA government, with financial inclusion in mind, came up with the idea of a “no-frills” account that didn’t require its user to maintain any particular amount of money in it. These type of accounts were later bureaucratically renamed to the “Basic Savings Bank Deposit Account” and the process of signing up people for these accounts slowly started taking place. From 2005 to 2013, the two UPA governments succeeded in opening up a little over 24 crore basic accounts, a good chunk of which had zero balance and very little in the way of transaction activity.
In contrast, the Modi government has managed to open a similar number of accounts (nearly 23 crore) in less than two years. There are a number of accounts that indicate the JDY push has sharper focus and better concentration and has managed to nudge public sector banks towards serious financial inclusion.
“The type of impetus that this [JDY] has given to the system is unparalleled. During the initial phases, bank managers were forced to leave their offices, go to far-flung areas and display a form of customer service that was usually not seen,” IIM Bangalore professor Charan Singh told The Wire.
Are there any issues that have arisen because of the JDY’s rapid push?
There isn’t a lot of quantitative or qualitative research into effectiveness of the JDY beyond how many accounts have been opened: much of the mainstream media reporting around the issue comes from the numbers put out by the government itself, which by itself are not very flattering.
The majority of empirical analysis into the financial inclusion project comes from a number of think-tanks such as MicroSave (a study that received guidance and support from the ministry of finance), CMF and Skoch. Professor Singh and a number of his students have also conducted research into the Jan Dhan ecosystem in Karnataka.
The twin issues that come up repeatedly are those of account duplication and account dormancy.
How do account duplication and dormancy affect the JDY’s mission?
According to MicroSave’s third study, customer account duplication under the JDY stands at 33%. This essentially means that of the 22 crore accounts opened under JDY, the owners of a little over 7 crore of those accounts already hold another account in addition to the JDY account.
The problem with this is that if the people who sign up for a bank account under JDY already hold another bank account, the purposes of financial inclusion aren’t really being served.
According to first hand-accounts from MicroSave’s qualitative research, this duplication “can be attributed to the target-based account open approach taken by banks”. What compounded this problem was that bank correspondents or bank mitras (as the JDY lexicon refers to them) received incentives for the opening of an account irrespective of whether the customers already had an account.
Initial advertising surrounding JDY may have also misled potential customers, some of whom thought that only the JDY account could be used to receive subsidies and benefit. Another common example that pops up is that customers mistook the overdraft (credit) facility of Rs. 5,000 as a free Rs. 5,000 that would be given on signing up.
The other issue of dormancy is one addressed by the government’s numbers: a little less than 30% of accounts are ‘dormant’, which, practically speaking, means that they are zero-balance accounts with minimal transactional activity.
“Are all accounts operational? I have my doubts. The government states that 70% of JDY accounts are operational but even here there is some doubt [about these numbers]. To a certain extent, [some of] these people are those who didn’t need a bank account,” Singh told The Wire.
Dormancy is an issue because zero-balance accounts still cost the bank in terms of maintenance; various estimates put maintaining a zero-balance account at anywhere between Rs. 100 to Rs. 150 per year. With nearly 7 crore JDY bank accounts being dormant, this costs the banks that signed them up anywhere between Rs. 650 – 760 crore per year.
Also, as with account duplication, if the incidence of account dormancy is high, it undermines the mission behind JDY, which is to bring banking services to the unbanked.
Could it be that duplication and dormancy are linked though?
A number of commentators believe so and to a certain extent, it’s backed up by numbers. The theory behind this is that the incidence of duplication (roughly 30%) and dormancy (roughly 30%) are one and the same because the people who hold accounts apart from their JDY account are unlikely to use their JDY account.
Firstpost’s Dinesh Unnikrishnan believes that we shouldn’t have to worry too much about dormant accounts because as the Aadhaar-bank account subsidy transfer process rolls out, people will start using their JDY accounts. However, if the majority of people who hold a JDY bank account and another bank account (which is Aadhaar-seeded), this may not be true.
Are there are any other issues with the way account enrollment has been carried out?
As with any major government scheme, the research put out by MicroSave and other agencies, as well as Singh, show that the JDY process isn’t completely above the board. There are reports of customers being charged for withdrawals, charged for setting up their accounts (anywhere between Rs. 100 to Rs. 500) and so on. For instance, according to MicroSave’s research, a few business correspondents in Madhya Pradesh stated that “all customers were charged for withdrawal as well as depositing cash in their JDY accounts”.
Customers in Jind, Haryana have complained for over six months that 16 rupees was deducted from their accounts every month as some vague “mobile alert charge”. Singh’s research in and around Bangalore shows that some respondents were asked to pay bribes to open their Jan Dhan account.
According to a public sector bank executive in charge of overseeing the bank’s Tamil Nadu JDY push, these issues “unfortunately arise” when there is a push for results and very little oversight on how the targets are achieved.
How effective has JDY’s Bank Mitra (Bank Correspondent) model been in reaching out to the unbanked?
The financial inclusion initiative reaches out to the unbanked through two methods: traditional bank branches and business correspondents (called bank mitras in JDY lexicon), who are appointed as bank representatives and trained to enroll people and handle transactions. Singh’s research in parts of Karnataka that most people signed up through the reach of traditional bank branches.
However, when one considers low-income category people in remote, rural areas that bank branches and ATM networks cannot penetrate, the effectiveness of the bank mitra model needs to be judged. MicroSave’s research lists a number of issues with the financial sustainability of bank mitras (BMs) as the JDY project moves from simply opening accounts to engaging with their customers and conducting transactions.
A little over 10% of business correspondents, surveyed by MicroSave, are currently dormant; the rate of dormancy has inched up over the last 14 months. According to the survey, “detailed analysis revealed that aspects such as inadequate commission, poor support from banks and the lack of business potential” as a major contributor to BM dormancy.
“Most bank mitras are not trained and they make only Rs. 3,500 – Rs. 4,000 per month, which is less than what they expect. Furthermore, the BM model does not authorise them to handle more complex transactions, which anyway they cannot do because of lack of training,” Singh told The Wire.
“They [BMs] like the job as it brings them respect but money involved is very less. Its a Catch-22 situation, we need more BM’s in every village in order for it to be successful but unless BM’s make more money nobody will sign up.”
Banks currently do not reimburse operational costs such as the travel that BMs have to undertake to link branches, stationery, rent and connectivity. A number of bank executives that The Wire spoke to also said that the capital subsidy for point of sale machines that was supposed to be distributed still has not made its way to many regions.
While BMs initially received incentives for signing up people for accounts, as saturation sets in they have to make money off transactions. This money isn’t rolling in yet, although things may change when Aadhaar-based subsidy transfers start rolling out.
Consequently, as MicroSave puts it “BMs are troubled by non-transparency and irregularity of commission payments… it remains to be seen how long they continue to engage in a business with questionable returns.
Has JDY laid the ground-work for Modi’s JAM policy?
The JAM policy is simple and is effectively an ecosystem that builds on itself. First the JDY initiative opens up bank accounts for the unbanked. These accounts are then seeded with Aadhaar numbers which paves the way for subsidy transfers. With mobile phones, transfers and transactions become much easier — thus resulting in a cashless society.
MicroSave’s research points out two issues with this. First, while 89% of the bank correspondents have devices that enable biometric authentication, not all of these are Aadhaar-based authentication. Only 72% of BMs currently have Aadhaar-enabled devices.
While this is a big improvement from the numbers that other studies put out in the first few months after JDY was started, the lack of Aadhaar-specific devices “will negatively impact the roll-out of DBT through JDY accounts in the future.” Indeed, this is a problem that others have noted already.
Aadhaar-enabled devices are only one half of the picture though. In order for subsidy transfers to be deposited in JDY bank accounts, they needed to be seeded with Aadhaar numbers. According to one research study, the Aadhaar seeding rate is 62% which while positive is “extremely slow”. MicroSave notes that “inadequate Aadhaar seeding deprives customers to hatch on to Aadhaar-enabled payment system.”
The second phase of JDY needs to desperately focus on this — even as the Modi government has set 2017 as a target for the full rollout of Aadhaar-based subsidy transfers.
Beyond opening bank accounts, has JDY succeeded in bringing previously unbanked customers into the financial fold? What about transactions, investments and other financial products?
The ultimate goal of JDY is to bring about financial inclusion. While the very first step of this involves opening up a bank account, the ultimate goal is to bring the unbanked into the financial system. This is why the JDY account is bundled with insurance and pension products, need-based credit and overdraft and remittance facilities.
To JDY and Modi’s credit, out of the first-time account holders who did sign up through JDY, the low-cost insurance and pension schemes have been relatively popular. MicroSave’s numbers assess that nearly 56% of JDY customers have signed up for an insurance or pension scheme primarily due to its “excellent value proposition and low cost”. There are a number of heart-warming, anecdotal stories of the JDY insurance plan helping out when it is needed most.
However, when it comes to other aspects of financial inclusion, it is clear that the JDY has a long way to go. For instance, each JDY account comes bundled with a RuPay debit card. Not only is the RuPay card distribution rate low (47%) — but the people who have been assigned cards face “issues of non-delivery and non-issuance of PINs”, according to MicroSave’s research. Last-mile connectivity issues are a huge problem that is flagged by almost every study on JDY’s progress.
There are a number of first-hand accounts in the research that point out many customers see no use in a RuPay card – while others worry that family members will misuse the card if it is given to them.
When it comes other financial products such as the overdraft (OD) facility, according to MicroSave, “qualitative analysis revealed banks disinterest in extending OD facility to [JDY] customers, given banks’ unwillingness to take up credit risk for customers with lack of credit and transaction history”. According to the study, only 2% customers per BM have received OD till date.
“If you ask me, while [JDY] is laudable, it is certainly not a runaway success. I don’t think JDY will be commercially viable for the next five years,” said Singh.
Singh’s prescription is more simple: rather than try to push urban-centric financial products on the poorer sections of society, it makes more sense to popularise and spread specific financial instruments aimed at that section of the population. One example of this could be an everyday recurring deposit scheme, or a financial plan that centers around harvest season.

Sunday, 3 April 2016

21:35

Prime Minister to launch the “Stand up India scheme” on April 5th,2016

Prime Minister to launch the “Stand up India scheme” on April 5th,2016 

Prime Minister will be launching the “Stand up India scheme” and a Web portal for the scheme on 05th April, 2016 at Sector 62, NOIDA. It will be attended by Governor, UP, Union Finance Minister, Union Minister for Culture and Tourism and Union Minister of State for Finance among others.

The “Stand up India Scheme” is being launched now to promote entrepreneurship among Scheduled Caste/Schedule Tribe and Women for loans in the range of Rs. 10 Lakhs to Rs. 100 Lakhs. The Scheme is expected to benefit large number of such entrepreneurs, as it is intended to facilitate at least two such projects per bank branch (Scheduled Commercial Bank) on an average one for each category of entrepreneur. 

The broad features of the scheme are as under:- 

I.Composite loan between Rs. 10 lakh and upto Rs.100 lakh, inclusive of working capital component for setting up any new enterprise. 

II.Debit Card (RuPay) for drawal of working capital. 

III.Credit history of borrower to be developed. 

IV.Refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of Rs.10,000 crore. 

V.Creation of a corpus of Rs. 5,000 crore for credit guarantee through NCGTC. 

VI.Handholding support for borrowers with comprehensive support for pre loan training needs, facilitating loan, factoring, marketing etc. 

VII.Web Portal for online registration and support services. 

The overall intent of the proposal is to leverage the institutional credit structure to reach out to these underserved sectors of the population by facilitating bank loans in the non-farm sector set up by such SC, ST and Women borrowers. The initiative will also develop synergies with ongoing schemes of other Departments. 

The process would be led by SIDBI with involvement of Dalit Indian Chamber of Commerce and Industry (DICCI) and various sector – specific institutions all over the country. The offices of SIDBI and National Bank for Agriculture and Rural Development (NABARD) shall be designated Stand Up Connect Centres (SUCC). 

The launch event would involve distribution of 5100 E-Rickshaws by Bhartiya Micro Credit (BMC) under the Pradhan Mantri Mudra Yojna scheme. In addition the recipients will also be covered under Pradhan Matri Jan Dhan Yojna, Pradhan Mantri Suraksha Yojana, Pradhan Mantri Jivan Jyoti Yojana, Atal Pension Yojana schemes and other eight significant Prime Minister schemes. 

“Bhartiya Micro Credit (BMC) aims to spread awareness of the financial inclusion and social security schemes and proposes to take the benefits to poor and destitute people in the country. The idea is to facilitate the up gradation of pedal rickshaw pullers into E Rickshaw owners and help create threefold increment in their income. Credit for all these facilities are being provided under Mudra Scheme. The progression to E rickshaw from pedal rickshaw will also help contribute towards achieving the goals of Swachh Bharat Abhiyan. Sach hua Sapna, Rickshaw hua apna!, shared Vijay Pandey, Managing Director, Bhartiya Micro Credit. 

As the first step of this process the pedal rickshaw pullers are provided training post which certificate is provided by NSDC. 150 women drivers have been trained. In addition the customers will also be able to book E Rickshaw through Ola mobile apps and make online payment via Freecharge, which will be integrated under the Digital India initiative. 

Under the scheme, charging and service station will also be set up, which will help the growth of emergence of small and micro enterprises along with creating many opportunities for entrepreneurs. This organically integrates Bhartiya Micro Credit (BMC) E-Rickshaws program into Prime Minister Shri Narendra Modi flagship ‘Stand Up India’ initiative. 

The Prime Minister on 15th August 2014 launched the Pradhan Mantri Jan Dhan Yojana (PMJDY) for “Banking the Unbanked”. As is well known, it met with resounding success as more than 21.3 crore accounts have been opened. Further, Pradhan Mantri MUDRA Yojana (PMMY) was launched by the PM for “Funding the Unfunded” by facilitating loans upto Rs. 10 lakh on 8th April, 2015. As on date, over Rs. 1.22 Lakh crore have been disbursed wherein over 57.75 lakh Scheduled Castes, 15.15 lakh Scheduled Tribes and 2.52 crore women entrepreneurs have been benefited under this scheme. To intensify this inclusive growth, the PM in his address to the nation on 15th Aug, 2015 had announced the “Start up India Stand up India” initiative. 

Source:PIBNEWS

Sunday, 6 September 2015

17:02

Finance Ministry May soon introduce a bill in the Budget session to give statutory status to Mudra Bank.

Finance Ministry May soon introduce a bill in the Budget session to give statutory status to Mudra Bank.

The finance ministry may soon introduce a bill in the Budget session to give statutory status to Mudra Bank. Through a legislation the bank will be set up to regulate micro finance institutions.

The existing Pradhan Mantri Micro Units Development and Refinance Agency (Mudra) Yojana is being executed through NBFC registered with RBI.

The conversion of the present NBFC into the Mudra Bank would take place through the Bill which may be introduced in the Budget session of Parliament next year, sources added.

The role envisaged for Mudra Bank include laying down policy guidelines for micro enterprise financing business as well as registration of MFIs, their accreditation and rating.

The present Pradhan Mantri Mudra Yojana (PMMY) with focus on financing 5.75 crore self-employed provides loans between Rs 50,000-Rs 10 lakh to small entrepreneurs. It has been introduced for development and refinancing activities relating to micro units. The scheme provides refinance to banks and other institutions at 7%.

During the current fiscal, banks will disburse about Rs 1.22 lakh crore to small business units under PMMY. The banking sector has been allocated an overall disbursement target of Rs 1,22,188 crore during 2015-16 for Mutra loans and the banks have already disbursed Rs 15,566 crore as on August 17 to more than 20 lakh borrowers under PMMY.

It has been decided to organise mega credit camps across the country between September 25, and October 2, for PMMY loans so that maximum number of borrowers could get credit as per their requirement under the three categories of loans.

The scheme was launched by Prime Minister Narendra Modi in April. Three products available under the PMMY are Shishu, Kishor and Tarun to signify the stage of growth and funding needs of the beneficiary micro unit or entrepreneur. Shishu covers loans up to Rs 50,000 while Kishor covers above Rs 50,000 and up to Rs 5 lakh.

Tarun category provides loans of above Rs 5 lakh and up to Rs 10 lakh.