The finance ministry has finally rolled out an overdraft facility under the flagship Pradhan Mantri Jan-Dhan Yojana (PMJDY).
By Surabhi
The overdraft facility of a maximum of Rs 5,000 is limited to one earning member of each family, preferably a woman of the household.
In fresh guidelines, the finance ministry has said the overdraft facility would be “a general purpose loan to provide hassle free credit to low income group or underprivileged customers to meet their exigencies without insistence on security, purpose or end use of the credit”.
The overdraft would be sanctioned for a period of three years and would be subject to an annual review.
The loan amount would be either four times the average monthly balance or 50 per cent of credit summations in account during the preceding six months.
The loan would however be capped at Rs 5,000 and the interest rate can be up to 200 bps higher than the base rate.
The finance ministry said the facility would be available only to those subscribers who have basic savings bank deposit accounts and have operated satisfactorily for at least six months and have registered regular credits under DBT or DBTL scheme or any other verifiable source.
The account should also be seeded with Aadhaar to avoid duplication, the ministry said, adding that the overdraft facility would not be available to minors and borrowers under Kisan Credit Card or other credit cards.
The government had announced the overdraft facility at the time of the roll out of the PMJDY in August last year but was finalising the details to ensure that it is not misused by subscribers.
However, the facility is intended to work as a micro finance measure that would prevent people from taking loans from money lenders.
Banks have opened 12.54 crore accounts under the scheme, which has a cumulative balance of Rs 10,499.62 crore.