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 RuPay Cards – The delivery race has begun

            As per reports appearing in the media, over the last couple of weeks, 1.5crs – 4 crs  banks accounts have been opened under PMJDY scheme in all bank branches in India.

            As the Accidental Insurance of INR 1lac is dependent on usage of RuPay Cards, the account holders are eagerly waiting to receive the RuPay card in their hands.

            The stupendous success of PMJDY in a short time has raised the delivery bar for NPCI as well as the respective Banks.

            To shorten the TAT for delivery of PMJDY RuPay Cards and to ensure that quality of RuPay Cards /  Holograms is maintained throughout the program, NPCI has announced a common RFQ (Request for Quote) covering the major 7 aspects of PMJDY program.

            The chief objective of this common RFP is to enable individual banks to place orders with the chosen vendors by avoiding the tendering process.

            Through this common RFQ, NPCI shall select all such empanelled vendors for supplying Personalised RuPay Debit Cards under uniform card design as prescribed under Pradhan Mantri Jan Dhan Yojna (PMJDY)

It is expected that over 50 million RuPay cards would need to be provided by Banks to the first time account holders under the program. Yes, at present the exact number of required cards is an unknown factor.

This poses unique challenges to the vendors, as they have to bid only on minimal data.  

            

PMJDY masterstroke to add 3.49 Crore Accounts – What an Idea Sirji!!

            The (Mahatma Gandhi National Rural Employment Guarantee Act ) NREGA Act 2005 provides enhancement of livelihood security, giving 100 days of guaranteed wage employment in every financial year to every household, whose adult members volunteer demanded unskilled manual work.

Panchayats at districts, intermediate and village levels will be the principal authorities for planning and implementation of the scheme.

MNREGA was set up on Feb 2, 2006 from district Anantapur in the state of Andhra Pradesh, India and originally protected 200 real "poorest" zones of the nation.

One of the major complaints of the workers under the NREGA Act 2005 was the consistent delay of wages.

Over the years the process got streamlined with migration from Cash based disbursements to Electronic based payments.

The absence of a wide-spread banking network was seen as a major hurdle in the roll-out of the electronic based payment system.

The Indian Posts with its comprehensive network  prompted the Rural Ministry to advise the workers to open savings accounts in Post Offices.

Now, with PMJDY generating wide spread interested amongst the rural populace, the Ministry of Rural Affairs is contemplating of nudging the workers to open PMJDY accounts in the Banks.

On the accounts being opened under PMJDY the wages mode would be modified from Post Office/Cooperative Bank to PMJDY Bank accounts.

The immediate impact would be an addition of 4.41 crores bank accounts if the residuary NREGA workers opt for PMJDY Bank Accounts.

What an Idea!

The conversion of accounts from Post Office to Banks under PMJDY mode is part of the MGNREGA PRC Agenda scheduled on 18th - 19th Sept 14

PMJDY – Which is better? – An Audit or An ePortal

            Still in its early days, PMJDY is already subject to an Audit. No, it is not audit of the PMJDY scheme, but the validation of basic bank accounts opened by various Indian Banks under PMJDY.

             The Indian Finance Ministry has given the mandate to KPMG to validate the number of basic banks claimed to have been opened by banks under PMJDY.

            The KPMG certification is an important tool for the NaMo ministry move to seek an entry into the Guinness Book of World Records, for the maximum number of bank accounts on a single day.

            The other spinoff the KPMG validation will be the comfort to the finance ministry on the claimed number of basic bank accounts opened by the banks.

            10 reasons why an ePortal should be the preferred monitoring tool rather than an Audit: -

01) Ease of data transfer from the respective banks CBS to the ePortal

02)Banks have been advised to open the PMJDY Bank Accounts under the Basic Banking Account product, which is uniform across all banks.

03)Reports of various types i.e District level, State level etc can easily be customized

04)After the initial set-up, no need of human intervention.

05)Real time availability of data

06)Reduces dependence on banks to submit the data manually

07)Cost effective, as no Maker-Checker will be required

08)Turnover in the account can be monitored

09)Steps can be taken to increase the stickiness of the accounts to the account holders

10) The ePortal can go live in 3 weeks i.e by Mahatma Gandhi’s Birthday

            

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