Aadhar-based no-frills bank accounts from Jan

Tags: Banking

Four PSU banks to partner govt’s financial inclusion agenda

As a part of its economic inclusion agenda, the government has decided to rollout bank accounts for poorest of the poor based on Aadhar numbers beginning January 1.

Four state-run banks have expressed their willingness to shoulder the responsibility of financial inclusion, while others are expected to fall in line by December-end.

While states have insisted that no other document must be required for people with Aadhar numbers to open a no-frills account in a state-run bank, the centre and banks are yet to agree on this preposition.

“We will work with state governments and banks shortly on this issue, and put in place a flawless mechanism” said DK Mittal, secretary, department of financial services, while briefing newsmen.

He spoke to newspersons after finance minister Palaniappan Chidambaram held a meeting with chief ministers of northern states on taking forward the government’s financial inclusion agenda.

Chief ministers of Delhi, Haryana, Jammu & Kashmir and Uttarakhand, namely Shiela Dixit, Bhupender Singh Hooda and Vijay Bahuguna, respectively, attended the brainstorming with finance minister along with chiefs of top banks and officials from the Reserve Bank of India (RBI). Finance ministers of Uttar Pradesh and Punjab also attended the meeting.

Government has targeted adding four crore accounts this financial year, while already 4.5 crore individuals and families hold savings accounts in different banks.

All cash transfers that accrue to individuals through various subsidies and schemes, would be made directly into these accounts via electronic transfers, thereby, eliminating middlemen and touts.

Subsidies on fertilisers, LPG, kerosene, food items and even payments made under rural employment guarantee scheme will be credited into these accounts.

Now, the states have agreed to do such e-transfer of funds under their own schemes into these accounts. Even pension and insurance proceeds would directly get into these accounts, thereby, reducing transaction costs and weeding out corruption.

Meanwhile, finance minister has agreed to roll out kisan credit cards (KCCs) in a big way across Jammu & Kashmir for bringing the valley residents under the scheme.

Education and healthcare would be the focus of financial inclusion agenda via banking across other states.

Rollout of Aadhar-based banking will begin in 51 districts across the country on pilot basis that will be expanded in phases.

The government has directed banks to open at least 100 branches in both, Jammu & Kashmir as well as Uttarakhand, to take banking to doorsteps of lowest strata of society.

Meanwhile, states like Delhi have sought larger share in disbursement of its share in central tax revenues. Shiela Dixit said politely but firmly, “Our share of Rs 325 crore has not changed for over 10 years. We have asked finance minister to increase this amount as most other welfare schemes-spending is done from our own resources”.

badarinath@mydigitalfc.com

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