The UPA government’s much touted financial inclusion programme, which is primarily targeted towards those who are economically backward, has become a hit with students who otherwise do not qualify under the category.
Banking sources said that large number of students who come from smaller towns to metros to pursue higher studies often apply for no frill bank accounts with zero balance. They do so just to acquire the required identity proof in those cities. The stringent know your customer (KYC) norms are often relaxed for no frill accounts.A senior official at FINO, a joint venture of public and private financial institutions with a focus on expansion of financial inclusion, said that several students have opened no frill accounts under the programme.
“Large number of students has approached us for zero frill accounts and they have successfully managed to open those accounts,” the official told HT. “This enables them to get some kind of identity proof which is critical in today’s context.”
While banks have been primarily focusing on rural areas for financial inclusion expansion by bringing in customers who have no bank accounts, the government has also indicated that the number of urban poor is increasing and the issue needs to be addressed.
“It is possible that a few students who have migrated from smaller towns to large cities for higher education have opened no frill accounts,” said chairman of a public sector bank, who did not wish to be identified.
Banks are required to provide a status report on financial inclusion from time to time to the finance ministry on the number of no-frill bank accounts that are being added. “Financial inclusion is one of the most important projects and it is necessary to look at the migrant workers as well and provide them a cushion,” the finance ministry official said.