Last week, while conducting one of my webinars on personal finance and financial literacy, an attendee asked me a very interesting question.
The question was- “My name is Mohan. I am a painter. I am from a village and I just moved to a city with my wife, I have never opened a bank account and my earnings are small and are in cash. What is your suggestion for me? Also, how can I financially secure my wife if something happens to me?”
It was a very challenging question for me.
That’s because I had assumed that all my attendees are making use of the banking system. I was so wrong!
Here, the questioner had never used a bank account because his earnings were small and all in cash.
I could very well ask him to open a new savings bank account and start slowly into the world of banking and finance.
But something just stopped me and pushed me to research and find an easy and better banking facility for him. I particularly wanted to address his concern about securing his wife financially in case of a mishap with Mohan.
I did not answer the question that night. Instead, I promised to get back to him with the most suitable option.
Since Mohan had never ventured into banking activities, I wanted to present him with an easy facility, to begin with.
I researched extensively.
My research leads me to some schemes designed by the Government of India, especially for people like Mohan, who do not have formal education and information about the financial facilities provided in our country.
Pradhan Mantri Jan Dhan Yojana. That’s where my research met its goal.
This scheme was established in 2014 and as of November 2020, 41.20 crore beneficiaries had banked on this scheme.
This scheme aims to provide facilities to the weaker section of society and added advantages of easy banking facilities at no added cost.
The primary advantage of this scheme is that the account holder need not maintain a minimum required balance. This means this account is a zero balance account.
There will be no bank charges debited to the account holder even if his account balance becomes zero due to no employment or other reasons.
Also, I felt, that the best part about this scheme is that, Mohan can get a RuPay at absolutely no cost! A RuPay card for free! He can withdraw money from ATMs without the hassle of tedious paper-mode money withdrawal from banks.
Hold on, there’s more to the advantage list!
The account holder is covered with insurance in case of accidental death for an amount of up to 2 lakh rupees! So, Mohan’s worry about financially securing his wife, in case something happens to him is solved!
Just before I contacted him to educate him about Jan Dhan’s account, another thought struck me.
Banks usually ask for valid government documents of the applicant before opening an account. I was worried if Mohan has ever got his Aadhar or other government documents made. Most people in rural India have never got themselves registered as citizens of our country. They don’t have valid documents, as they never find a need for them.
But then, I read, that any person, even without government documents can open this small savings account. Brilliant, right?
He will be issued an identity card along with the applicant’s photograph by a department of government, public sector undertaking, or scheduled commercial banks.
To make it more secure, a letter of attestation is to be obtained, signed by a gazette officer. If the account is owned jointly, then photographs of both the account holders are required. Okay! Logical.
There’s more! You would be surprised to know that an overdraft facility of 10,000 rupees is also available!
Zero balance account with a 10,000 rupees excess withdrawal facility! Wow! You might have never come across something like this!
This feature is not available in any other savings bank account facility.
Indeed a great scheme for small savings accounts holders! They can use this excess credit as their emergency fund!
Not just the financial advantages, this account helps the account holder to inculcate some good habits.
There is no limit on the number of deposits but there is a limit on withdrawals. Only four withdrawals in a month can be made including withdrawals through ATMs.
Limit on withdrawals helps in bringing a habit of saving money. Don’t you agree with me? If you don’t, let’s blame it on the difference in our perspectives 😉
Well, it’s not just Mohan who can take the benefit of this scheme. If you are a retired employee or a person owning a small Kirana or a medical shop, I’d say this is the scheme you should go for.
Zero balance account, a free RuPay card, Insurance benefits up to 2 lakh rupees, and a credit facility of 10,000 rupees! That’s plentiful for a new banking customer.
Seems too good to be true, right? There is a small catch!
This small savings bank account (SSBA) requires you to not have any other saving account in any other bank. The bank will make a declaration of the same before opening an account in their branch.
But if you wish to open more accounts in another or the same bank with time or growth of your earnings, simply convert this SSBA to a regular savings bank account.
Finding this scheme suiting Mohan’s requirements finally put me in a satisfying place.
I was happy that I could help him make the best use of India’s banking facilities in keeping his small savings safe!
Here are FAQs provided by GOI regarding the scheme, for your reference.