Prime Minister Narendra Modi's ambitious financial inclusion scheme, Jan Dhan Yojana, focuses on banking for all. Unveiled on August 15, the scheme plans to provide bank accounts to 15 crore poor persons with an overdraft facility of Rs 5,000 and accident insurance of Rs 1 lakh. Discussing the government's initiative, GS Sandhu, Secretary, Financial Services, said that according to an RBI survey of the impact of Jan Dhan Yojana in 10 districts, it was found that around 68 percent first timers opened their accounts under the scheme.
"Our own survey, the kind of survey that banks are doing shows 75 percent of the people have come for the first time," he said.
He expects the LPG subsidy transfer to take place from November 15. According to him, the LPG subsidy system has evolved and he expects other schemes to follow. He sees a roll out of more subsidy grants within a year.
Elaborating on the overdraft system under the scheme, the banking secretary said it has been linked with savings. "So, if you want overdraft facility you should have savings in your account," he said.
The government on Monday had cancelled the appointment of eight chairmen-cum-managing directors and 14 executive directors of state-run banks appointed by the previous UPA government.
Sandhu said that eight public sector banks will get their CMDs within a month. He feels the change in bank CMD selection process will bring in transparency and said the government has taken a 360 degree feedback on the procedure.
Commerce Minister Nirmala Sitharaman said that the idea of Jan Dhan Yojana is to reach as many households as possible.
Discussing the Goods and Services Tax (GST), the commerce minister said that the government is 'very close to a solution on the matter'. She said the Constitutional Amendment Bill can be tabled in the next session of Parliament.
Below is the transcript of GS Sandhu's interview with CNBC-TV18's Latha Venkatesh.
Q: A large number of accounts or at least some of the accounts we understand have been opened by people who already have accounts especially in the urban areas and not only in the urban areas on the simple desire that 4-5 months down the line they are going to get Rs 5000 for free. Is there any number that you have of unbanked people getting banked by the Jan Dhan Yojana?
A: The surveys that we have conducted and RBI has conducted, RBI has conducted a survey of 10 districts and what they have found is that 68 percent of these people who have opened accounts they have come for the first time, that is the RBI survey.
Our own survey, the kind of survey that the banks are doing that shows 75 percent of the people they have come for the first time. So, people who have opened second, third account that has been done in the initial rush. When the programme was started that time everyone thought that it is better to have more than one account. Even the bank branches they also did not understand this so they also allowed them to open second, third account. Now they are all telling them, educating them that there is no point of opening second, third account, one account is enough because ultimately the money from the government schemes will be flowing into only one account and you keep that account intact.
Q: What about the government using that for Direct Benefit Transfers (DBT). I will tell you where the bankers came from, bankers whom we have been speaking to on financial inclusion or no frills account usually complain that yes the account is opened, then what? Most people are not using that account. They are usually people with hand to mouth existence or it is the distance which forbids them but for various reasons practically 75 percent of the accounts are absolutely unused. However they get used when the state transfers money through that account. So, where are you on DBT? Are you progressing with the states or with your own transfers NREGS rapidly equivalently along with Jan Dhan?
A: So, far as central government is concerned it has been decided already that the LPG subsidy transfer is going to take place from November 15. So, we are preparing for that. The first step in that direction is the LPG subsidy transfer, November 15 is the date when we are going to start that. It has been announced, all preparations are being done for that, that is number one.
Number two is we have linked overdraft facility with the savings. So, if you want overdraft facility you should have savings in your account. Number three is the NREGS payments, these are being done by the states. 3-4 states they have already started and other states are also beginning.
Q: Which are the states?
A: Rajasthan is one Madhya Pradesh is the second one and there is one more state. So, three states they have already started this.
Q: You have reasonable guarantee that the other states will follow?
A: They will also follow. They were doing it earlier also but now what we are telling them is, they were doing it through post offices, through the banks. As post offices are not on CBS whereas our payments are going on the CBS platform. So, now many of these accounts are being opened with the banks and the payments will be going there.
Q: Six banks at the moment don't have chairman and I think seventh one has joined yesterday or I think eight banks now. With October 30 Punjab National Bank and Oriental Bank of Commerce also join the ranks of banks without chairman. Obviously the process is being overhauled. What is being overhauled, is the composition of the selection committee overhauled, is the methodology being overhauled?
A: Very soon these banks will have their CMDs and the selection procedure is being changed somewhat. So, that there is more transparency, more objectivity, that is being brought into the system. So, with that in place now may be within a month's time we will have the chairman in place.
Q: A little more elaboration because from an audience point of view, from an investor point of view the interest is to know how soon the reappointments will happen and how will they happen. Is it that the composition is governor's nominee, the financial services secretary and two external experts is that composition going to change or is it something else?
A: That composition will remain, may be there is an addition of some more experts to that. Our timeframe is about a month. So, within a month we will have a new chairman selected.
Q: Is there some way in which you are taking feedback? Is that why the process has been changed to take more feedback about your candidates?
A: We are taking feedback also. 360 degree feedback is being taken, that has already been taken. So, that will be there, apart from that more objectivity in evaluation of their performance and how do they fare in the interviews.
