By TNN | 12 Jul, 2014, 12.11PM IST
State-run banks will offer overdraft facility of Rs 5,000 with each of the 15 crore accounts proposed to be opened under the government's new financial inclusion initiative. But lenders said the move was fraught with risk of fraud and misuse.
Financial services secretary G S Sandhu said each account will have an accidentinsurance of Rs 1 lakh and a RuPay debit card. Starting August 15, Modi's government is targeting to get banks toopen 3 crore accounts in urban centres and another 12 crore in rural areas.
If this is met, banks may end up extending overdraft of nearly Rs 75,000 crore this year to account-holders with no credit history . Besides, it's possible for an individual to open accounts across banks as systems are not linked. So, benefit can be claimed on one account in, say , SBI in an Aurangabad village and also on another with in Rewari.
Sandhu defended the scheme saying banks will follow KYC norms, put in place checks. Additional secretary Snehlata Srivastava said bank accounts come with an overdraft facility of up to Rs 25,000.
The department of financial services has already budgeted for defaults. A department note earlier said the scheme plans a credit guarantee fund to cover possible defaults in overdraft accounts.
Financial services secretary G S Sandhu said each account will have an accidentinsurance of Rs 1 lakh and a RuPay debit card. Starting August 15, Modi's government is targeting to get banks toopen 3 crore accounts in urban centres and another 12 crore in rural areas.
If this is met, banks may end up extending overdraft of nearly Rs 75,000 crore this year to account-holders with no credit history . Besides, it's possible for an individual to open accounts across banks as systems are not linked. So, benefit can be claimed on one account in, say , SBI in an Aurangabad village and also on another with in Rewari.
Sandhu defended the scheme saying banks will follow KYC norms, put in place checks. Additional secretary Snehlata Srivastava said bank accounts come with an overdraft facility of up to Rs 25,000.
The department of financial services has already budgeted for defaults. A department note earlier said the scheme plans a credit guarantee fund to cover possible defaults in overdraft accounts.
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