PM Modi Pledges Bank Account for All Indians

New Delhi: Prime Minister Narendra Modi pledged a new scheme on Independence Day to ensure all Indians can have a bank account, blaming the high level of suicides among farmers on their inability to pay back money-lenders.

"Why are our farmers committing suicide? It's because they have to take money at huge interest rates from the money-lenders," he said in his speech from the Red Fort.

"We will have a ' people wealth scheme' (Jan Dhan Yogna) so that even the poorest of the poor can have a bank account of their own," Mr Modi said.

"Today, there are crores of families which have mobile phones but no bank accounts. We have to change this. Economic development must benefit the poor and it should start from here," he said.

The ambitious plan to enable every household to have a bank account in coming years will allow the government to deliver more of its welfare schemes in cash rather than subsidies.

Only 35 per cent of Indians have bank accounts, according to the World Bank, and lack of access to formal financial institutions often forces farmers and others in rural India to build up savings in cash, or borrow money from unscrupulous moneylenders.

Direct cash transfers, an initiative started under the previous Congress government, will improve efficiency and reduce the risk of massive graft, many economists believe.

Mr Modi said his government will set up a scheme to provide farmers with special guarantees in exceptional circumstances worth up to a lakh. Under the Jan Dhan Yojana, he said, "when a person opens a bank account he will get a debit card and the family will get Rs 1 lakh insurance cover."

(With Agency Inputs)