Moneycontrol PRO
you are here: HomeNewsBusiness

Coronavirus | Banks may reactivate some inoperative Jan Dhan a/cs to facilitate govt cash transfers

Banks have been asked to look at the feasibility of reactivating some Jan Dhan accounts that have been left inoperative due to cash flow problems

March 30, 2020 / 02:54 PM IST

State-run banks are examining the feasibility of reactivating some inoperative Jan Dhan accounts so that these bank accounts can receive money under the recently announced government cash transfer scheme to economically weaker sections of the society.

This plan was announced last week by the government under the novel coronavirus, or COVID-19, economic relief package. There is no official communication so far, but banks have been asked to look at its feasibility at the branch level, sources in the know told Moneycontrol.

On March 24, Finance Minister, Nirmala Sitharaman announced a slew of relief measures including direct cash transfers to the economically poorer sections. As per this, women Jan Dhan account holders will receive Rs 500 per month for three months to meet household expenditure. Besides, Sitharaman announced cash transfers to farmers, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) beneficiaries, poor widowers and pensioners.

“Branch managers of public sector banks are looking at this. If they are convinced that these accounts are KYC complaint and are inoperative due to mere cash flow issues, they can reactivate these accounts to receive cash transfers announced by the government,” a senior official from National Bank for Agriculture and Rural Development (NABARD) said.

According to latest data available on the Jan Dhan Yojana website, there are 38.28 crore beneficiary accounts, which hold a total balance of Rs 1,18,105.97 crore. As of January 15, less than 19 percent of these accounts were inoperative. This ratio has come down significantly over the years. In March 2017, about 40 percent of these accounts were inoperative.

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more

“Most Jan Dhan accounts are inoperative due to lack of cash flows. These accounts are thus marked inoperative by the banks. Hence, with the prospects of getting some cash flows in, banks should have no issues in reactivating them,” said a senior banker.

Under normal circumstances, if there is no transaction in an account for, say, six months to one year, banks freeze such accounts and reactivate them only with fresh documentation, KYC, etc. But, in this case, banks are likely to initiate the process themselves.

Sitharaman, last week, announced a Rs 1.7 lakh crore welfare package to mitigate the economic damage caused by the coronavirus-led 21-day lockdown. As per the plan, daily wages under MGNREGA have been increased from Rs 182 to Rs 202.

Farmers under the PM Kisan Yojana scheme would receive Rs 2,000 in the first week of April. The move would benefit 8.69 crore farmers. That apart, the government also intends to provide Rs 1,000 to senior citizens, widows and physically handicapped.

The 21-day lockdown is expected to severely impact the livelihoods of rural population, especially migrant workers. According to various research reports, economic activity is likely to shrink significantly as the COVID-19 lockdown takes a toll on the economy. CARE Ratings expects the economic growth to slow to 1.25-2.5 percent in Q4 FY20.

“With the virus now affecting and disrupting global supply chains and the economy for almost three months now, the situation is having a severe implication on the Indian economy as well. This is because India is dependent on global markets for exports and imports, which has the potential to hit the Indian companies and, in turn, economy,” CARE said in a March 30 note.

Dinesh Unnikrishnan
Dinesh Unnikrishnan
first published: Mar 30, 2020 02:54 pm