Prime Minister Narendra Modi Friday announced a financial inclusion mission to mark India's 68th Independence Day and extend banking, credit, insurance and pension services to all households.
Named as "Pradhan Mantri Jan Dhan Yojana" or Prime Minister's People's Wealth Mission, it will provide two bank accounts, at least, to every household and an insurance scheme for the poor, among other numerous benefits.
"We want to integrate the poorest of the poor people with bank accounts," the prime minister announced during the course of his I-Day speech from the historic Red Fort here.
"Why is our farmer committing suicide today? He takes credit, but can't repay. So he dies," Modi said, giving the rationale for the new scheme. Besides a bank account, everyone will get Rs.100,000 insurance, he added.
Finance Minister Arun Jaitley had said in his budget speech July 10 that the prime minister himself will launch a financial inclusion scheme. He later said it will also deter people from putting their monies in fraudulent schemes and losing it.
While the details of the scheme is to be announced soon, finance ministry officials said besides the organised financial system, some 225,000 mom-and-pop shops that function as correspondent bankers or representatives will be roped in to provide all the financial inclusion schemes.
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The officials said the mission will have two phases -- one starting immediately with a year's target for universal banking and the second from the next Independence Day that will take up insurance and pension and conclude Aug 14, 2018.
The mission will dovetail into it the RuPay credit card scheme launched by the state-run National Payments Corp in May to enable ATM withdrawals and electronic payments at all Indian banks and financial institutions.
"There were some schemes in the past. But there was no attraction or pull factor. The new mission focuses on awareness so that people will also ask opening a bank account," a finance ministry official said.
"Also, the target this time is every household and not a geography or a population-based approach and say 'the scheme applies to villages with over 2,000 people'. This is the difference."
Towards this end, the government intends to deploy technology, especially mobile phones, in a big way to achieve targets. Banking, micro credit, financial literacy, insurance and pension will be integrated.
As per 2011 Census, only 58.7 percent Indian households availed banking services. The finance ministry estimates that 75 million households still do not have access to financial services.
Around 600 million people are also under-banked.
Under the Swabhimaan campaign of February 2011, banking facilities was to be given in all villages with a population above 2,000. Banks identified more than 74,000 villages. Now, 74,351 villages have been covered either by branches, correspondents or mobile banking.