Next Phase of Jan Dhan Yojana to Mobilize Financial Savings

Friday, March 13, 2015

The finance ministry on Wednesday said the next phase of the government’s ambitious financial inclusion scheme, Pradhan Mantri Jan Dhan Yojana (PMJDY), will be focused on mobilisation of financial savings to reverse the decline in the savings rate.
“This would be possible by activating the PMJDY accounts by progressive use of direct benefit transfer ( DBT), increasing financial literacy and creating universal social security cover for all citizens,” Finance Minister Arun Jaitely said, appreciating the efforts of public sector banks (PSBs) in providing financial inclusion to all households by opening at least one bank account per household under PMJDY.

After reviewing the quarterly performance of PSBs, Jaitely said banks should take commercial decisions without fear or favour as the government is committed to provide them financial autonomy, both in letter and spirit. In a statement, the finance ministry said the focus of the quarterly review was to go through the performance of banks and understand their challenges and constraints.

The review meet was attended by heads of all PSBs and state-run financial institutions. The ministry also held discussions with PSBs on the Reserve Bank of India’s move to lower key interest rates, while making a case for higher lending towards the housing sector.

“With regard to cut in base rate by banks, let’s wait and see how that plays out. We have a very competitive financial services industry and once certain banks start to take action, we will see how it unfolds,” said minister of state for finance Jayant Sinha.

The RBI had last week announced a 25 basis points or 0.25% cut in repo rate or the rate at which it lends to banks. Sinha said as far as retail loans are concerned, banks have already brought down the rates “a fair bit”. Some bankers, however, said that they may wait till the next bimonthly monetary policy review of the RBI on April 7 before cutting interest rates.

Source: The Economic Times (link opens in a new window)

financial inclusion