SBI to offer overdraft facility to 7,00,000 small account holders

State Bank of India (SBI) will offer overdraft facility to nearly 7,00,000 account holders enrolled under the Pradhan Mantri Jan Dhan Yojana (PMJDY). The bank has opened nearly 100 million accounts under PMJDY so far.

"We are looking at the transactions of the accounts under PMJDY, and gauging the number of accounts which can be provided overdraft facility. We have found, so far, some 7,00,000 accounts can be provided overdraft facility," said Arundhati Bhattacharya, chairperson, State Bank of India, at the Federation of Indian Chambers of Commerce and Industry (Ficci) Banking Conclave here today.

This apart, SBI is also planning to come out with small value insurance, investments and flexible deposit schemes.

"It is on account of inability of people to access banks, that several small deposit schemes flourished in places like West Bengal. Through business correspondent model, we will give access to banking facility to rural people. We are coming out with small value insurance, investment products and flexi-deposit schemes," said Bhattacharya

SBI continues to open around 60,000 accounts per day in the financial inclusion space, said Bhattacharya.

Notably, the PMJDY scheme offers an overdraft facility of up to Rs 5,000 to account holders. A few public sector banks have also started offering such a facility to their account holders. Under the scheme, the facility is offered to people whose accounts have been functional for consecutive six months.

PMJDY, launched as a national mission on financial inclusion, envisages universal access to banking facilities with at least one basic banking account for every household. In addition, the beneficiaries get RuPay debit card having inbuilt accident insurance cover of Rs 1 lakh. The plan also envisages channeling all government benefits to the beneficiaries accounts and pushing the Direct Benefits Transfer (DBT) scheme of the Union government.

"The loans can be given for either entrepreneurship or as personal loans. We will look into accounts that have sufficient turnover for offering overdraft facilities. These account holders are mostly from very low income group bracket. The monitoring of the loans could be done through the use of technology and also by engaging business correspondents," said Bhattacharya.

SBI was increasingly focusing on franchisee model for financial inclusion, said Bhattacharya.