Spend, Save and Invest Smartly
There is a famous saying by George Bernard Shaw “Lack of money is the root of all evil ”. For the growth and progress of the nation, each of its citizens needs to have access to banking, insurance and other financial services. This is known as financial inclusion.
The benefits of financial services need to seep down to the poor and people in rural areas and an ambitious program called the Pradhan Manthri Jan Dhan Yojana was launched by the prime minister of India on August 28th 2014. The aim of this scheme was to provide banking and insurance services to the unbanked and the uninsured in the country. Hiding money under the mattress and getting no interest on it? You work in a city and send money to your family in your village through friends at the cost of pilferage? Worry not the Pradhan Manthri Jan Dhan Yojana is here.
o You have to be an Indian citizen and above 10 years of age to be eligible to open a savings bank account free of cost, under the Pradhan Manthri Jan Dhan Yojana scheme. This scheme is open to both people in rural and urban areas.
o If you are a minor (above 10 years of age), then you need a guardian to operate this account.
o Your account is a zero balance savings account (Your account is active even if there is no money in the account) and yes…you get interest on the money you have in this account .You will be given a Rupay card (An Indian ATM card or an ATM cum debit card), to withdraw money from this account.
o The zero balance savings account is a basic banking account and you will get a cheque book and other facilities only if you maintain a certain minimum balance as per the banks requirements.
o You can make any number of deposits in your zero balance savings account under the Pradhan Manthri Jan Dhan Yojana scheme. You can withdraw money only 4 times a month (inclusive of ATM withdrawals) under the Pradhan Manthri Jan Dhan Yojana scheme.
o Your zero balance savings account will be linked to your aadhar card number.
o If you do not have an aadhar card then you need an identity and address proof such as a driving license, passport, PAN card, voter’s card, NREGA job card attested by a State Government Official as part of your Know Your Customer (KYC) norms.
o You can open a savings bank account under the Pradhan Manthri Jan Dhan Yojana without an identity or an address proof by submitting a self attested photograph with a signature or a thumb impression. This type of account is called a small account.
o A small account is generally opened by illiterate/tribal’s who have no identity or address proof mainly for direct benefit transfer (say for LPG).This account is valid only for 12 months.
o You will not be provided cheque book facilities for a small account. The balance in your small account cannot exceed INR 1 Lakh and you cannot withdraw more than INR 10,000 a month.
o If you open a small bank account you will have to submit an address proof within 6 months of opening the account and only then can you avail all facilities under Pradhan Manthri Jan Dhan Yojana.
o If you avail a zero balance savings bank account under the Pradhan Manthri Jan Dhan Yojana you will get free accidental insurance worth INR 1 Lakh for yourself and your entire family if you are in the age group of 18-70 years. You need to have a Rupay card and use it at least once within 45 days of receiving the card from the bank. You need to intimate the bank within 30 days of meeting with an accident to make your claim.
o You will also get free life insurance worth INR 30,000 with this account. There is a catch here. Only a single member of your family is eligible to get life insurance under the Pradhan Manthri Jan Dhan Yojana. This would be the head of the family, or the breadwinner of the family. This member of the family has to be between 18-59 years of age. If this member dies then the nominee gets INR 30,000. (Only 1 claim per household).
o The member of your family who is covered by life insurance under the Pradhan Manthri Jan Dhan Yojana(PMJDY), has to exit his life cover when he crosses 60 years of age. Life insurance under the Pradhan Manthri Jan Dhan Yojana is available only till the FY 2019-20 after which its need will be reviewed.
o You can avail life insurance under this scheme only if you have opened a bank account for the first time between August 15th 2014 to January 26th 2015.
o If you are a Central or State Government employee, or Your income is taxable under the income tax act 1961, or TDS is deducted from your income or that of your family members, or you have subscribed to the Aam Adami Bima Yojana then you will not get life insurance under this scheme.
o You can get an overdraft facility (loan given which has to be repaid), up to INR 5000 only after 6 months of opening an account under the Pradhan Manthri Jan Dhan Yojana scheme.
o This might look like a small insignificant amount , but for people who live in rural areas this can be a major benefit. They could use this money to set up their farms or other agricultural activities and make a decent life for themselves.
o Overdraft facility is available only to one account holder in each family (household), preferably a lady member of your family.
o In India more number of people are subscribed to mobile networks than have bank accounts. This means the Pradhan Manthri Jan Dhan Yojana scheme can benefit from mobile banking facilities. You will be able to check your balance as well as transfer funds (money), using your normal mobile phone under the Pradhan Manthri Jan Dhan Yojana scheme.
o You can also get SMS updates/alerts on your account balance, debit/credit on your mobile phone.
You can open an account under the Pradhan Manthri Jan Dhan Yojana scheme in a number of Public Sector and Private Sector banks.
What happens if you already have a bank account?
o If you already have a bank account with a bank, then you do not need to open a separate account under the Pradhan Manthri Jan Dhan Yojana scheme.
o You can get a Rupay card issued to your existing account and get the benefits of accidental insurance.
o You can even get the overdraft facility if you operate the account as per the banks conditions.
Remember: This is just the start of financial inclusion in India. Soon the focus would shift to pension and equity investments. An ambitious plan to open demat accounts for all Indian citizens on similar lines to bank accounts is in the pipeline.So learn Pradhan Manthri Jan Dhan Yojana (PMJDY).