Sunday, January 24, 2016

Public/Private Sector Banks should be banned from opening PMJDY Accounts


          The PMJDY launched by Prime Minister Narendra Modi in August 14, has transformed many lives across India. The PMJDY implementation has not only transformed the lives of the PMJDY account holders but also the lives of the Implementation Team across various participants.

          Read here about success stories in Public sector banks viz: Canara Bank, Central Bank of India, Dena Bank, IDBI Bank, State Bank of Bikaner and Jaipur, State Bank of India, State Bank of Patiala and Union Bank of India.

          Each bank has devoted considerable human capital to ensure the success of PMJDY scheme. Yes, there are other success stories which are hidden from the public.

          As usual there are two sides to a coin, Success and Failure. Success or Failure depends from which view point the person is representing.

          PMJDY is a success as can be seen from the below infographic.  


          The next step is to prepare the base to enable new participants to widen the accomplishments of PMJDY.

          The following 11 steps will introduce PMJDY to a new set of Players in the Indian Banking system.

          In the next 12-18 months, Payments Banks and Small Finance Banks will start rolling out their offerings to the Indian public.

          The 56 Regional Rural Banks to be grouped under Small Finance Banks for the purpose of MUDRA Loans.

          The District Central Cooperative Banks to be grouped under Payment Banks for the purpose of PMJDY Overdraft Accounts.

01)   Payment Banks should have the exclusive rights to open PMJDY accounts.

02) Payment banks should have the exclusive rights to open PMJDY Overdraft Accounts.

03) All new entrants to Banking system should open a Bank account with a Payment Bank.

04) All credits from Government schemes should only be to bank accounts with a Payment Bank.

05) Payment Banks should not issue Cheque Books to their account holders. Transactions should be through Digital mode or self-withdrawal slips.

06) PMJDY Overdraft facility should be granted automatically to all PMJDY accounts wherein Government Credits are received.

07) The concept of ‘Family Accounts’, to be introduced to minimise over-indebtedness

08) Account Number portability to be activated from Day 1

09) PMJDY Overdraft account should be tagged to a physical Payment Bank Branch which is within a radius of 10  kms from eligible account holder’s residence. As and when the account holder shifts his residence, the PMJDY OD Account should be auto-ported.

10)  Mandatory physical address verification of PMJDY OD Account holder through the centralised eKYC agency. The eKYC agency to tag the GPS coordinates of the account holder in the central repository.

11)  The PMJDY Overdraft Limit be increased to INR10,000/- to accounts which are of 3 years vintage.

Regulatory Backing:-

a)     Payment Banks to be allowed to open PMJDY Overdraft Accounts

b)    One of the key assessing factors for MUDRA Loans applicants is the successful track record in servicing their PMJDY Overdraft Account.       

Additional Reading Material:-


AMMA Loans

Introduction to New Small Finance Banks

Introduction to New Payment Banks