Pradhan Mantri Jan Dhan Yojana, Digital, UPI, Banking Innovation…All you need to know about the banking system in India

At a hotel in India’s Information Technology hub Bangalore, a sales man scans the assistant manager’s Identity Card, and takes his finger print on a biometric machine attached to his tablet. Within few minutes, the assistant manager becomes eligible for an account with Airtel Payment Bank, being the first of its kind owned by India’s largest telecom company Airtel and adding to the community of millions of people who have joined payment banking system that is revolutionizing the retail sector from head to heel.

This is how the banking experience has changed from a process that involved pen and paper to completely paper-less, thus saving time and money.

Pradhan Mantri Jan Dhan Yojana:

…48% people in India did not have access to banking as of March, 2014. To foster inclusion of those who did not have bank accounts, The Prime Mister of India came out with a mega initiative called “Pradhan Mantri Jan Dhan Yojana” through which you need only one rupee to open an account in a bank. So far, more than 30 crore accounts have been opened under Jan Dhan.

September 1, 2014 was a landmark in the history of India which saw over 1.5 crore bank accounts opened in a single day.   

Why was it so important?

Most Indian family units depend on usurious cash banks for credit and on the Saradhas and Saharas for their fund’s needs. Formal route of banking for all may take care of this issue. On the off chance that bank accounts turn into the standard, it will be more cost effective for the government to pay their subsidies directly to their linked bank accounts, rather than apportioning them through the immense, broken system of government organizations.

The premium on accident insurance will be borne by the National Payments Corporation of India. Be that as it may, it can't likewise pay the extra security advantage attached on finally. All things considered, the administration's go-to pawn, the Life Insurance Corporation, might be reserved in. There is additionally the subject of how banks will benefit from these bank account records once they're operational. Will banks be keen on giving good service if the record is zero-balance? While the Center has guaranteed to "repay" the costs, the quantum and mechanics of remuneration are misty right now.

Unified Payment Interface (UPI)

The year 2015 saw RBI giving licenses more than 20 companies for offering UPI enabled banking services in India. UPI is a single window payment interface, allowing its users to transfer money in just a click. Unlike earlier when you had to visit your home branch and form a queue to transfer money to your loved ones, UPI has revolutionized the banking experience completely; you can now transfer money from the comfort of your home with just a single click. What you need is a computer or a smartphone and internet connected to it. UPI will now use existing systems including Aadhaar Enabled Payment System (AEPS) and Immediate Payment Service (IMPS) to provide hassle free banking experience to users. 

An excellent and convenient payment enabler, UPI helps you initiate your banking transactions in seconds from the comfort of your home, giving you more banking empowerment to transact money. You just need the mobile number of the people you wish to send the money to, and then the transfer is just a click away. 

The objective of Demonetization

Before the decision was taken to demonetize Rs. 500 and Rs 1000 notes in the month of November, 2016 by our honorable Prime Minister Shri Narendra Modi, more than 80% money was in cash form. The unprecedented move to demonetize the currency notes forced people to join the formal banking sector since many were not willing to go online.

The ability of the of government to make the entire banking system digital will not only help people in terms quick transactions, saving their time, but it will also help the government to easily track the movement of money cause the only solution to fight corruption is to make the entire financial  system digital. 

Though the demonetization of Rs. 500 and Rs. 1000 notes move by the government happened over night and caused inconvenience to the citizens to a large extent, this is going to have a large benefit to people and businesses over long term as 99% of money will be in digital form, and it will be easy for the government to keep a tab on financial aspects of businesses. Hence, no corruption.