Overdraft underJan-Dhan comes under priority sector lending: RBI

Giving a big boost to Pradhan Mantri Jan-Dhan Yojana (PMJDY), the Reserve Bank of India, recently said bank overdrafts of up to Rs.5,000 in accounts opened under this financial inclusion mission would be treated as priority sector lending.


Overdrafts extended by banks up to Rs.5,000 in PMJDY accounts will be eligible for classification under priority sector  advances (‘others’ category) as also weaker sections, provided the borrower’s household annual income does not exceed Rs.60,000 for rural areas and Rs.1.20 lakh for non-rural areas.


  • The PMJDY was conceived as a national mission on financial inclusion with the objective of covering all households in the country with banking facilities and having a bank account for each household.
  • It is a scheme for comprehensive financial inclusion. Accounts can be opened with zero balance.
  • The mission mode objective of the PMJDY consists of 6 pillars.
  • During the 1st year of implementation under Phase I (15th August, 2014-14th August,2015), three Pillars namely:
    1. Universal access to banking facilities
    2. Financial Literacy Programme and
    3. Providing Basic Banking Accounts with overdraft facility of Rs.5000 after six months and RuPay Debit card with inbuilt accident insurance cover of Rs 1 lakh and RuPay Kisan card, will be implemented.
  • Phase II, beginning from 15th August 2015 upto15th August, 2018 will address the other three pillars,
    1. Creation of Credit Guarantee Fund for coverage of defaults in overdraft accounts
    2. Micro Insurance and
    3. Unorganized sector Pension schemes like Swavlamban.
  • In addition, in this phase coverage of households in hilly, tribal and difficult areas would be carried out. Moreover, this phase would focus on coverage of remaining adults in the households and students.
  • The implementation strategy of the plan is to utilize the existing banking infrastructure as well as expand the same to cover all households.
  • The major shift this time in this Financial Inclusion effort of the Government is that households are being targeted instead of villages as targeted earlier. Moreover both rural and urban areas are being covered this time as against only rural areas targeted earlier. The present plan pursues digital financial inclusion with special emphasis on monitoring by a Mission headed by the Finance Minister.

Benefits under PMJDY Scheme:

  1. Interest on deposit.
  2. Accidental insurance cover of Rs.1.00 lac
  3. No minimum balance required.
  4. Life insurance cover of Rs.30,000/-
  5. Easy Transfer of money across India
  6. Beneficiaries of Government Schemes will get Direct Benefit Transfer in these accounts.
  7. After satisfactory operation of the account for 6 months, an overdraft facility will be permitted
  8. Access to Pension, insurance products.
  9. Accidental Insurance Cover, RuPay Debit Card must be used at least once in 45 days.
  10. Overdraft facility upto Rs.5000/- is available in only one account per household, preferably lady of the household.

Sources: The Hindu, PIB, pmjdy.gov.in.


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