Convert small accounts to PMJDY accounts: Finance ministry

With reports of sudden spurt in deposits at Jan Dhan accounts in the wake of demonetisation, finance ministry has asked the banks to convert the small accounts into PMJDY (Pradhan Mantri Jan Dhan Yojana) accounts by carrying out eKYC and KYC(know your customer).

With the conversions, the PMJDY accounts are likely to see a surge in deposits as the small accounts come with limits on deposits and withdrawals.

In an office memorandum issued to banks, the department of financial services under the Ministry of finance said, "A large number of small bank accounts were opened during the initial phase of the campaign, which can be converted to PMJDY accounts by carrying out eKYC and KYC."

 

When such accounts holders come forward to use these accounts by way of deposit and/or withdrawal, steps should be taken to carry out withdrawal through the eKYC/KYC exercise and simultaneously seed the accounts with their Aadhaar and mobile numbers as appropriate, the memorandum added.

According to a Reserve Bank of India statement, those persons who do not have any of the 'officially valid documents' can open 'small accounts' with banks.

A 'small account' can be opened on the basis of a self-attested photograph and putting a signature or thumb print in the presence of an official of the bank. These small accounts have limitations regarding the aggregate credits (not more than Rupees one lakh in a year), aggregate withdrawals (not more than rupees ten thousand in a month) and balance in the accounts (not more than rupees fifty thousand at any point in time).

These small accounts are valid normally for a period of twelve months and are allowed to continue for a further period of twelve more months, if the account holder provides a document showing that she/he has applied for any of the officially valid document, within twelve months of opening the small account.

"Many small accounts were opened initially without any compliance and just by putting signatures at bank branches. Mostly small accounts have zero balances. Small accounts comes with limit on deposits and withdrawals. After the conversions, the deposits at PMJDY accounts are likely to spurt as it can accept more deposit compared to the small accounts," said a bank official.