Jan Dhan Yojna next stage of social, economic development: USIBC

Jan Dhan Yojna next stage of social, economic development: USIBCWashington: Hailing Prime Minister Narendra Modi's 'Jan Dhan Yojna', the US-India Business Council (USIBC) today described it as an "important step" toward the next stage of India's social and economic development.

In a statement, USIBC said Modi's announcement of "a new pan-India comprehensive financial inclusion plan that expands access to financial services to a wider cross-section of India's citizens" is "an important step toward the next stage of India's social and economic development".

American investors are grateful for the Government of India's stewardship of the Indian economy, said the USIBC acting president Diane Farrell.

"USIBC looks forward to continuing to bolster industry's engagement across pensions, payments, banking, insurance and asset management," she said.

Modi today launched 'Pradhan Mantri Jan Dhan Yojana' to help the poor open bank accounts which will come with the facility of a debit card and an insurance cover of Rs 1 lakh.

"India is at a cross road with a unique opportunity to reinvent their approach to financial inclusion," said Vijay Advani, USIBC Board Member and executive vice president of Franklin Templeton Investments.

"I am very pleased that the Government of India is focusing on financial inclusion given that many Indians do not have access to basic banking and financial services," he said.

"While the household savings rate is high in India, most of these savings find their way into unproductive physical assets such as gold and real estate. Any efforts to increase the share of financial assets and channel the high savings into capital markets, through financial institutions such as banks, mutual funds and insurance companies would be a positive for investors and the economy at large," Advani said.

The goal of ensuring access to affordable financial services including banking, investments, credit, insurance, pension facilities and most importantly, financial literacy appears to be within the reach of India? s vast population, he said.

"A lot, however, depends on how various components of this plan come together and how effectively the Government is able to scale up participation from the private, public and social sectors," Advani said.

"We are pleased to see the focus & strong commitment that Prime Minister has made to financial inclusion drive. Strong execution of these actions will enable acceleration of economic growth," said Kiran Shetty, regional vice president & managing director, South Asia, Western Union.

USIBC reiterated its support to work with India to strengthen US industry's participation in its financial inclusion efforts expanding financial literacy and access to a broad range of financial services for India? s underserved population, including a high-quality national payments system.

It also commended the Indian government for its meaningful regulatory steps taken to improve the investment climate in financial services, including harmonization of KYC and startup SME incentives announced in the Finance Minister? s recent budget address.

"They reinforced the need for transparency and long-term regulatory certainty across segments, including for non-bank financial companies (NBFCs) as the inclusion plan is implemented," the statement said.

Furthermore, USIBC encouraged the Indian Government to consider tax reforms to further encourage long term savings and investments and put in place enabling regulations allowing professional fund managers to manage these insurance and pension assets in an efficient manner.

These efforts could further contribute to the objective of creating long-term wealth for Indian citizens and add to current efforts to broaden the base of investors in the traditionally under-served areas of India.

"The real challenge lies in making available a variety of financial products, including microcredits, to the poorest section of society. Therefore, financial education plays a crucial role in success of any inclusion plan," said Naresh Makhijani, KPMG India Leader for Financial Services.

(PTI)