Financial Inclusion Schemes in India

Financial inclusion is the process of providing financial and banking services to people. Over the past years, the government has launched many financial inclusion schemes in India. These schemes not just helped Indians enhance their financial conditions but also have contributed to the Indian economy.

What is Financial Inclusion?

When it comes to describing financial inclusion meaning, we can say that this process makes sure to offer financial services and products to individuals. This incorporates everyone in society by offering them fundamental financial services irrespective of their savings or income. Financial inclusion is all about offering financial solutions to the economically underprivileged groups of our society.

The term Financial Inclusion is widely used for explaining the plan of savings and loan solutions to the poor easily and cost-effectively. It makes sure that the poor individuals make the best use of money and achieve financial education. With the progress in digital transactions and financial technology, now more startup companies are making financial inclusion easier to attain.

Top 5 Financial Inclusion Schemes in India

After much research and planning, the Indian government introduced some financial schemes. Let’s have a look at the list of 5 financial inclusion schemes in India:

  1. Sukanya Samriddhi Yojana (SSY)
  2. Pradhan Mantri Jan Dhan Yojana (PMJDY)
  3. Pradhan Mantri Mudra Yojana (PMMY)
  4. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
  5. Atal Pension Yojana (APY)

1. Financial Inclusion Schemes - Sukanya Samriddhi Yojana (SSY)

On 22nd January 2015, Prime Minister Narendra Modi introduced Sukanya Samriddhi Yojana. This scheme was launched under the ‘Beti Bachao, Beti Padhao’ campaign. This scheme’s objective is to fulfill the marriage and education costs of girl children.

Features

  • You can open 1 account per girl child. If there are two girls in a family, you can open a maximum of two accounts.
  • If the first or second delivery brings twins or triplets, a third account can be opened.
  • During one financial year, you can deposit a minimum of INR 1000 and a maximum of INR 1.5 Lac.
  • From the account opening date, you can deposit in the account until the completion of 14 years.
  • When the girl turns 21, you can close the account. If you don’t close the account or withdraw the money even after your girl turns 21, you can still earn the interest on the amount.
  • You must submit a birth certificate while opening the account.

Benefits

  • A parent or guardian can open and operate the account as early as the girl turns 10.
  • To fulfill the girl child’s educational needs after she turns 18, you can withdraw up to 50% of the balance.
  • You can transfer the money from the post office to an authorized bank or from one authorized bank to another and vice versa.
  • This scheme provides an 8.6% interest rate and income tax advantages.

2. Financial Inclusion Schemes - Pradhan Mantri Jan Dhan Yojana (PMJDY)

In August 2014, the Indian Government introduced the Pradhan Mantri Jan Dhan Yojana. This scheme offers easy access to financial solutions like credit, remittance, pension, insurance, deposit, and savings accounts to the needy and poor class of our society.

Features

  • Zero balance account can be opened
  • If you want to access the cheque facility, you need to maintain a minimum balance.
  • No charge is levied on opening an account under this financial inclusion scheme.
  • INR 30,000 life insurance cover and 1 Lac accident insurance cover are available for individuals who opened bank accounts before 26th January

Benefits

  • 4% interest per year on money deposit
  • No minimum balance is needed
  • Offers overdraft facility up to INR 5000 after running the account for six months
  • You can get the money directly in your bank account
  • You can transfer the money to any Indian account

3. Financial Inclusion Schemes - Pradhan Mantri Mudra Yojana (PMMY)

MUDRA (Micro Units Development & Refinance Agency Ltd is a new initiative of the Indian Government for micro and small enterprises, non-form sector, and non-corporate entities whose credit requirements are below INR 10 Lacs. The Finance Minister of India introduced this scheme during the Union Budget 2016.

Three products are available under the Pradhan Mantri Mudra Scheme:

  1. Shishu – Provides loans of up to INR 50,000
  2. Kishor – Provides loans of up to INR 5,00,000
  3. Tarun – Provides loans of up to INR 10,00,000

Features

  • People who use tillers, tractors, and two-wheelers for commercial jobs can apply for a Mudra loan.
  • Individuals engaged in Agri-allied non-farm income-producing jobs like bee-keeping, poultry farming, pisciculture, etc can apply for a Mudra loan.
  • Offers transport vehicle loans
  • A business loan is available for vendors, traders, shopkeepers, and other commercial activities in the service sector
  • Offers working capital loan through MUDRA cards
  • An equipment loan is available for small enterprise units

Benefits

  • It’s a Business Installment Loan for purchasing machinery and plant, working capital need, remodeling workspaces, etc.
  • You can avail Mudra loans for vehicles
  • Offers Rural Business Credit (RBC) as working capital loans and Business Loans Group Loans (BLG) as Dropline Overdraft Facility
  • The loan payback tenure is as high as 7 years

4. Financial Inclusion Schemes - Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

This financial scheme was declared by Finance Minister Arun Jaitley during Budget 2015. It’s a renewable insurance scheme that provides life insurance coverage of INR 2 Lacs on death.

Features

  • You can nominate a family member while applying for the scheme, to avail of the insurance in the case of death or total disability.
  • You can avail of this scheme from any public insurance agency in India
  • Your age must be between 18 and 50 to apply for this scheme and you should have a savings bank account.
  • Aadhaar linking with your bank account is compulsory to enjoy the benefits of this scheme.

Benefits

  • Life insurance cover of INR 2 Lacs is available at only INR 330 per year.
  • The nominee can reap the death benefit
  • The insurance cover is for 1 year. You can renew it every year.

5. Financial Inclusion Schemes - Atal Pension Yojana (APY)

This voluntary financial scheme was declared by the Indian Government in the 2015-2016 Budget. The purpose of this scheme is to help needy people working in the unorganized sector so they can get a regular income after they retire. This scheme motivates poor people to save for their retirement. The Pension Fund Regulatory & Development Authority (PFRDA) handles all operations of the Yojana.

Features

  • A risk-free scheme
  • The Government of India co-contributes towards this financial scheme
  • People will start getting pensions when they will become 60 years old.
  • You can choose to get a fixed pension of INR 1000, INR 2000, INR 3000, INR 4000, and INR 5000 after your retirement.

Benefits

  • Every bank account holder can join this scheme.
  • If you pass away during the scheme, your spouse can complete the duration of it or claim the contributions.
  • Private-sector workers can also apply for this scheme.
  • Offers tax benefits
  • Pays a pension of up to INR 5000 per month

Conclusion:

We have discussed only 5 financial inclusion schemes in India. There are many more schemes to strengthen the accessibility of economic resources and increase the savings of the poor section of our society. In a nutshell, these schemes are major steps to help the entire economic development of the underprivileged population of India.

Financial Inclusion Schemes in India - FAQs

You don’t have to give your Aadhaar number while subscribing. However, the Aadhaar card is the main KYC document needed by banks for identifying nominees, beneficiaries, and the spouse of the subscriber.

Financial inclusion schemes in India are introduced to provide banking facilities to the needy sections of the Indian Economy. These schemes have allowed banks to offer credits for project funding.

Yes, this special refinance scheme can help every woman entrepreneur. It is also known as the Mahila Uddyami Scheme. This scheme provides an interest rebate of 0.25% when women borrow a MUDRA loan from a microfinance institution or an NBFC.

The death advantage eligibility is suitable for the nominee selected by the account holder. The chosen nominee would get a death advantage of INR 30,000 if something unpredictable occurs to the life assured.