PM Narendra Modi to announce financial inclusion overhaul on Aug 15

A major boost will be given to the continuing financial inclusion programme by Prime Minister Narendra Modi on Independence Day.

According to a note sent to the Indian Banks Association (IBA) by financial services secretary GS Sandhu, the boost includes envisaging insurance and pension cover apart from a default cover for lenders.

This is likely to envisage opening 15 crore more bank accounts, 12 crore of which will be in rural areas over next four years, according to the note.

Modi's new comprehensive financial inclusion programme has three major shifts from the one pursued by the previous government, according to news agency PTI.

First, the earlier efforts at financial inclusion had villages as the unit for coverage while the present plan focusses on coverage of households. Secondly, only rural areas have been the focus so far while both rural and urban areas have been included now, says the note. Thirdly, the present plan is proposed to be implemented as a ' mission mode' project.

The scheme envisages a comprehensive coverage of all excluded households by a six-pillar approach in two phases, according to the note.

The first phase of the programme, which begins from August 15 and ends on August 14, 2015, will provide basic banking accounts with overdraft facility of Rs 5,000 and RuPay debit card with inbuilt accident insurance cover of Rs 1 lakh and creation of credit guarantee fund for coverage of defaults in overdraft accounts, according to the ministry.

The second phase will cover micro-insurance and unorganised sector pension schemes like Swavlamban.

IBA said already state-owned banks, insurers and regulators are working overtime to ensure a smooth start. "We are busy chalking out the modalities of implementation of the project, which will be implemented in the entire country after it is declared by the Prime Minister on August 15," IBA chairman KR Kamath, told PTI.