The Narendra Modi government will ask banks to open 200 million accounts in a year from this Independence Day.
The Sampoorn Vittiya Samaveshan Mission aims not just to open bank accounts but to provide people access to other financial services like insurance and pension.
Financial Services Secretary G S Sandhu had two rounds of discussions on this with bankers in the last week of June and early July, said a public-sector bank executive who did not wish to be named.
The task force set up to monitor the progress of the scheme includes the finance minister, the Reserve Bank of India governor and the chairmen of the Insurance Regulatory Development Authority and the Pension Fund Regulatory and Development Authority.
The government is using Census 2011 as basis for the financial inclusion plan. Of the 246.7 million households in the country, 144.8 million have access to banking.
Another bank executive who did not wish to be named said it was a huge task to open two accounts in each unbanked household between August 15 and August 14, 2015.
Banking sub-service areas in districts will cater to 1,000-1,500 households to ensure there is a bank within 5 km of every house by March 2016. In all, about 600,000 villages will be brought into these sub-service areas.
In 2013, 14 state-run banks set up 7,840 branches across the country, one in four in the countryside. Bankers said given staff constraints and the viability of opening full-fledged branches in rural centres, demand for branch expansion far exceeded supply. Banks will rope in 60,000 banking correspondents - retired government and bank employees; post offices and kirana shops - to assist in the plan.
The cost of the one-year plan is pegged at Rs 1,700 crore. Wages will take up Rs 1,200 crore. Promotion expenses, merchandising and infra will cost another Rs 500 crore. The National Bank for Agriculture and Rural Development is expected to chip in with Rs 1,000 crore and the rest will come from banks.
Account holders completing a financial literacy programme will get instant overdrafts of Rs 5,000. Welfare benefits will flow into these accounts, reducing the chance of accounts turning dormant.
There is also a proposal to set up a credit guarantee fund to cover defaults from such borrowers. Besides, insurance up to Rs 50,000 will be provided. The government could contribute Rs 1,000 a year in each National Pension Scheme account into these accounts, bankers said.