Student Scholarship Bank Accounts should be eligible for PMJDY Overdraft

 

Over 10 crores of PMJDY accounts have been opened in bank branches all over India.

PMJDY Bank accounts have been opened in public sector bank branches as well as private sector bank branches.

The immediate priority of the stake holders is to reduce the % of Zero Balance accounts in the PMJDY bandwagon.

Routing Direct Benefit Transfers (DBT) including LPG subsidy is the preferred method to stimulate transactions in the PMJDY accounts.

Insurance coverage – both accidents and life, is another tool to keep the transactions flowing.

Another attractive feature is the INR5000/- clean overdraft facility.

The overdraft comes with lots of strings attached. The first set of PMJDY accounts will be eligible for OD facility after a couple of months.

As there is no precedent for mass clean overdrafts in the banking industry, the initial conditions are stringent.

India has a rich tradition of student scholarships. A large number of scholarship schemes are available for students in India. Both Central and State agencies offer scholarships. Private trusts too offer scholarships.

Majority of the scholarships are disbursed to the respective bank accounts. It is almost mandatory for students to have bank accounts.

scholarshipsinindia.com website offers good details of the various types of scholarships available in India.

momascholarship.gov.in displays the type of scholarships accessible to minority students in the nation.

10 reasons as to why the PMJDY Overdraft facility has to be offered to students too:-

a)     All scholarship amounts will be credited to such accounts.

b)    Calculation of the eligible overdraft amount is easy, as there will be scholarship credits.

c)     Increase the catchment populace of PMJDY OD accounts.

d)    Inculcate financial discipline amongst students.

e)    Credit report can be easily built at the time of processing education loans in future.

f)     Students can adopt batch of OD accounts in their locality and guide them for efficient utilisation of OD limits.

g)    Increase the visibility of PMJDY scheme amongst the public.

h)    Increase loyalty to the ruling party, which can be redeemed at the time of elections.

i)      Tool to reduce the number of Zero Balance Accounts.

j)     No additional investment in terms of infrastructure required. Only correct mapping required.

 

 

 

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PMJDY Overdraft – Preference to women borrowers

            PMJDY accounts are an important tool in our country’s Safe ePayments journey. PMJDY accounts encourage the account holders to move from cash based transactions to electronic based transactions.

            One of smart features of PMJDY accounts is the Overdraft of INR 5000/- for accounts with good behaviour.

            The cooing period for accounts to be eligible for Overdraft facility is 6 months. This means that the first set of accounts will eligible after March 2015.

            In the near future, more clarity is expected on the calculation mode for 6 months i.e A) 6 months from date of account opening or B) 6 months from the date of the first transaction.

The second option is preferred, as this will encourage the PMJDY Account Holders to execute quality transactions in their accounts.

            In an informal chat with presspersons at a PMJDY mega camp organised by Corporation Bank at Vamanjoor village in Mangalore taluk on November 22, 2014, Snehlata Shrivastava, Additional Secretary, Department of Financial Services, Union Ministry of Finance,  said that the overdraft of ₹5,000 will be given to head of the family, preferably women, under the scheme.

This is because women have the habit of saving and prudent in their spending, she said.

Link 1, Link 2

PMJDY - Overdraft of INR 5000. 5 reasons for success

    

The contours of Prime Minister Jan Dhan Yojana (PMJDY) Overdraft of INR 5000/- will be unveiled in the next couple of weeks.

As per the present thinking, the OD can be availed by account holders who have seeded their Aadhaar Number in the Banks account database and have satisfactory operations for 6 months.

Similar guidelines as applicable instant credit of outstation cheques may apply to OD requests too.

The guidelines for quantifying satisfactory operations are not laid down in black and white, but based on banker’s experience.

The following points are considered while assessing a customer account for satisfactory operations: -

a)    No cheque bounce

b)   No decline of eTransaction due to financial reasons

c)    Average balance

d)   Credits in the account at regular intervals.

There are many apprehensions that the due to OD facility a large number of accounts will slip into NPA mode and banking industry will face huge losses.

            Assuming out of the 7.5crs accounts, 20% (1,50,00,000) of accounts will be eligible to avail OD facility, funds to the tune of INR 7,500 crores would be required.

5 reasons why the NPA level will be LOW in the OD Accounts

01)  The accounts have already cleared the first step of credit appraisal i.e the satisfactory operations test.

02)Inflow of subsidy credits at regular intervals.

03)Inflow of other Government payouts

04)The Indian Jugaad ability to ensure credits and debits are always equal

05)The poor are always trustworthy, Yes, the poor always trustworthy