FM review financial inclusion schemes

  • April 6, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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FM review financial inclusion schemes

Subject: Economy

Section: Monetary Policy

Context: The review meeting, which will be chaired by DFS Secretary Vivek Joshi, will cover Jansuraksha Schemes, Pradhan Mantri Mudra Yojana, Stand UP India and PM SVANidhi scheme, sources said.

PM SVANidhi scheme

  • It is a special micro-credit facility scheme for providing affordable loan to street vendors.
  • The scheme is aimed at enabling the street vendors to resume their livelihoods that have been adversely affected due to COVID-19 lockdown.
  • Under the scheme, each of these streets vendors will be given a credit loan of Rs 10,000, which they can return as monthly installments within a year.
  • Those who repay their loans on time will get 7 percent annual interest as subsidy which will be transferred in their bank accounts. There is no provision for penalty
  • The scheme targets to benefit over 50 lakh street vendors, who had been vending on or before 24th March this year, in urban areas. The duration of the scheme is till March 2022. The street vendors belonging to the surrounding peri-urban or rural areas are being included as beneficiaries under the urban livelihoods programme for the first time.
  • The lending institutions under the Scheme include Scheduled Commercial Banks, Regional Rural Banks, Small Finance Banks, Cooperative Banks, NBFCs, Micro Finance institutions and Self Help Group banks.

Jan Suraksha Schemes

  • It comprises of Pradhan Mantri Suraksha Bima Yojana which offer Rs. 1000 to Rs. 5000, Pradhan Mantri Jeevan Jyoti Bima Yojana offering Rs. 1 lakh to Rs. 2 lakh for accidents, and Atal Pension Yojana offering Rs.2 lakh insurance cover.
  • Following the success of the Pradhan Mantri Jan Dhan Yojana scheme, an accidental cover scheme, which became a hit with the citizens of the country, the Modi-led government has introduced three new schemes known as the Jan Suraksha Schemes. The schemes cover areas such as insurance for the poor, pension and so on.

The three schemes introduced under the Jan Suraksha Schemes are,

  1. Pradhan Mantri Suraksha Bima Yojana
  2. Pradhan Mantri Jeevan Jyoti Bima Yojana
  3. Atal Pension Yojana

The schemes were simultaneously launched in 160 cities and towns across India.

1. Pradhan Mantri Suraksha Bima Yojana

The Pradhan Mantri Suraksha Bima Yojana was introduced by the government to encourage the citizens of India to get insurance access and coverage. The minimum annual premium for the scheme is Rs.12, and subscribers are given two types of insurance coverage – Accidental death or complete disability and partial disability insurance cover. The terms for both types of insurances are between 2 to 4 years. The insurance cover for partial disability is up to Rs.1 lakh and for complete disability or death is Rs.2 lakh. The tax-free premium is debited from one’s bank account automatically in the case of a long-term insurance plan. Subscribers can nominate their family members, who would receive the insurance coverage in the case of death or complete disability.

The eligibility criteria for the scheme are:

  • Should be an Indian resident between the ages of 18 to 70 years.
  • Should have a savings account with any bank in India, from which the premiums would be automatically debited.
  • Should provide his/her Aadhaar card and regular KYC documents when applying.
  • Every Indian citizen is eligible for the scheme.

2. Pradhan Mantri Jeevan Jyoti Bima Yojana

  • With only 20% of the country’s population having insurance, the Pradhan Mantri Jeevan Jyoti Bima Yojana was introduced to provide insurance for the poor of the country and raise awareness on the need for an insurance cover. The premium of the scheme is at an affordable Rs.330 per annum and the risk coverage per annum is at Rs.2 lakh. While applying for the scheme, subscribers can nominate a person, usually family members, to avail the insurance in the case of complete disability or death. The scheme can be availed from any public insurance company across the country.

The eligibility criteria are mentioned below:

  • The applicant should be between 18 to 50 years of age.
  • Should be an Indian resident.
  • Should have a savings bank account from which the annual premium is automatically debited.
  • Should have an Aadhaar card and regular KYC documents when applying.

Since the introduction of the Jan Suraksha Schemes, over 63 million Indians have subscribed to either the Pradhan Mantri Suraksha Bima Yojana, the Atal Pension Yojana or the Pradhan Mantri jeevan Jyoti Bima Yojana at banks across the country making the Jan Suraksha yet another successful move by the government.

3. The Atal Pension Yojana

The Atal Pension Yojana was introduced by the Modi-led government to make amends to the already existing National Pension Scheme. In a bid to make the people of India aware of the necessity of having a retirement corpus, either as an investment or to earn a monthly pension, the Atal Pension Yojana aims at giving pensioners a fixed monthly income. Subscribers of this scheme are not allowed to make withdrawals before the time of maturity – retirement age or 60 years – and can earn a monthly pension income between Rs.1,000 to Rs.5,000, depending on their contribution through the tenure.

The eligibility criteria for Atal Pension Yojana are listed below:

  • The subscriber when applying should be between 18 to 20 years of age as a minimum of 20 years of contribution before retirement is required.
  • Should have a savings account from which the contribution will be automatically debited towards the scheme.
  • Should provide the regular KYC documents, preferably Aadhaar card.
  • Should have their mobile registered with the bank holding their account.

Financial Index

  • The Reserve Bank of India(RBI) announced the formation of acomposite Financial Inclusion Index (FI­Index) tocapture the extent of financial inclusion across the country.
  • The FI­Index for the period ended March 2021 stood at53.9 compared with 43.4 for the period ended March 2017.
  • The annual FI­Index will be published in July every year, the RBI said in a release.
  • The index incorporates details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators.
  • The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.
  • The FI Index comprises three broad parameters (weights indicated in brackets)
    • Access (35 percent),
    • Usage (45 percent), and
    • Quality (20 per cent) with each of these consisting of various dimensions, which are computed based on a number of indicators.
  • It has been constructed without any ‘base year’.
  • A unique feature of the index is the Quality parameter that captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection, and inequalities and deficiencies in services
economy FM review financial inclusion schemes