By Prarthana Mitra
The government on Wednesday decided to double the overdraft limit to its flagship Jan Dhan Yojana, to encourage more people to open bank accounts and avail the benefits of the scheme. Among other incentives, the Pradhan Mantri Jan Dhan Yojana (PMJDY) was transformed into an open-ended scheme, by extending the overdraft limit to Rs 10,000.
What is the PMJDY?
Launched for a period of four years in 2014, the scheme aimed at improving access to financial services, especially in the rural areas and among lower-income households, in a mission for financial inclusion. The Yojana offers awareness and instruments of insurance, pension, and bank accounts.
The first phase of the PMJDY scheme focused on opening basic bank accounts for citizens without one and providing them with the RuPay debit card with inbuilt accident insurance cover of Rs 1 lakh. The second phase which began in August 2015, was engaged in providing micro-insurance to account holders and pension schemes to all those employed in the unorganised sector.
Calling it a “runaway success” at a press conference, Finance Minister Arun Jaitley announced that the PMJDY should be allowed to continue indefinitely to ensure all citizens have the same access to banking and financial instruments.
He further said that 32.41 crore accounts have been opened under the scheme so far, with Rs 81,200 crore deposited in them, Among them, 53% are held by women, while 83% of the accounts are seeded with Aadhaar.
Incentives and amendments
Besides extending the overdraft facility from Rs 5000 to Rs 10,000, the Union Cabinet also decided not to attach any conditions for an overdraft up to Rs 2,000. The age limit for availing overdraft facility has also been revised from 18-60 years to 18-65 years.
Under the expanded coverage from ‘every household to every adult’, the new accidental insurance cover for new RuPay cardholders stands at Rs.2 lakh instead of 1 lakh, for PMJDY accounts opened after August 28, 2018.
According to the press release, the Jandhan-Aadhaar-Mobile (JAM) will continue to offer coverage of these activities and bolster the pace of digitisation, financial inclusion and insurance habits of the nation.
Prarthana Mitra is a staff writer at Qrius.