(GIST OF YOJANA) Strengthening the
Strengthening the Financial System
● Financial Inclusion is globally considered to be a critical indicator of
development and well-being of society. Inclusive Financial Development is the
need of the hour. For Financial Inclusion to be more effective there is a need
for digital infrastructure and digital literacy in small towns and rural India.
● Financial Inclusion facilitates access to the
financial system allowing them to build financial and physical assets, seek
credit for their education, healthcare and businesses and also save for the
unexpected exigencies and old age. It helps in reducing poverty and inequality.
It also offers an array of financial services that provide protection in case of
untimely death or accident of the bread earner and also provides a safety net in
the old age.
Key highlights of the data
● It is estimated that globally there are 1.7 billion adults worldwide i.e.
31 per cent of adults who don't have a basic transaction account and are
deprived of the benefits that financial services offer. Steps have been taken
towards financial inclusion such as No-Frill accounts, overdraft in savings
accounts, BC/BF Model, KCC/GCC guidelines, liberalized Branch expansion,
introducing technology products and services, prepaid cards, mobile banking etc,
allowing RRBs/ cooperative banks to sell insurance and financial products,
financial literacy programs, SHC, core banking system (CBS), National Electronic
Funds Transfer (NEFT), National Electronic Clearing Service (NECS) immediate
Payments Service (IMPS) and Aadhar Enabled Payment Systems (AIPS) etc.
● The financial inclusion program known as the Pradhan Mantri Jan Dhan Yojana
(PMJDY) with zero balance is helping people to become part and parcel of the
mainstream of economic development. As on 23 January, 2019 as many as 34.03
crore bank accounts were opened entitling these people to the benefits of
various Government schemes.
● It is also found that about 20.14 crore people belong to the rural and
semi-urban regions. The PMJDY provides access to different financial services
like availability of basic savings bank account, access to need based credit,
remittances facility, insurance and pension to the excluded sections i.e. weaker
sections and low income groups. It provides interest on deposit, accidental
insurance cover of Rs. one lakh, no minimum balance requirement, a life
insurance cover of Rs.30,000, overdraft facility after 6 months, access to
pension, insurance product, RuPay Debit Card and Overdraft facility up to
Rs.5000/- to only one account per household.
● As part of financial inclusion, the Mudra Yojana aims to generate
employment and promote start ups to strengthen the availability of credit up to
10 lakhs to poor and small entrepreneurs. Besides, several other schemes have
been initiated to ensure access to the social security system through the Atal
Pension Yojana, Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti
Bima Yojana etc.
● Demonetization, GST and digitalization, internet banking and mobile banking
converting 1.5 lakh post offices spread through the length and breadth of the
country into payment banks to reach in the most remote areas and giving
permission to 11 payment banks to operate etc. is
helping in making the process of financial development inclusive.
Features relating to financial inclusion
● Features relating to financial inclusion in the Interim Union Budget 2019
are, direct income support of Rs. 6,000 per annum lo
12 crore farmers to be transferred directly to their bank accounts, under
Pradhan Mantri Kisan Samman Nidhi Yojana, pension plan under Pradhan Mantri
-Yogi Maindhan for 10 crore shramiks or workers; extension of Kisan Credit card
scheme to Animal Husbandry, Interest subvention, private sector lending to
provide an access to credit for those who are vulnerable and marginalized.
● To encourage savings and investment, exemption will be available for
another Rs. 1.5 lakh. The RBI has been supportive of the financial inclusion
drive where the priority sector lending (PSL) mechanism by banks seeks to
provide an access to credit for those vulnerable sections of the society, who
are often deprived of it due to their perceived lack of credit worthiness.
● There is a need to encourage FINTECH (financial technology) use of software
and modem technology i.e. use of smartphones, for mobile banking, investing
services and crypto currency; (to be issued by Reserve Bank) blockchain to help
make financial services more accessible to the general public. Financial
literacy drives need to be more aggressive and driven at the school level where
student develop a culture of understanding and transacting through the account
and continue to do so for their lifetime. It would be possible if people better
understand the financial products and services and their role in their dad)