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The Finance Ministry has directed Life Insurance Corporation (LIC) to immediately operationalise the benefit of life cover under the Pradhan Mantri Jan Dhan Yojana (PMJDY).
LIC has been asked to expeditiously enter into a memorandum of understanding (MoU) with the Indian Banks Association (IBA) for providing this facility, official sources said.
Contrary to earlier stance, the Finance Ministry has now said that National Payments Corporation of India (NPCI) would not be required to enter into MoU with LIC and IBA for providing this life cover benefit.
During the launch of PMJDY scheme on August 28 in the capital, Prime Minister Narendra Modi had announced a life cover of ₹ 30,000 with the RuPay card.
This benefit would be made available for all those who subscribe to a bank account for the first time during the period August 15 to January 26 next year, it was announced.
Under the recently framed guidelines for the facility of life cover, the Finance Ministry had specified that a four-partite agreement – LIC, IBA, NPCI and Department of Financial Services—will have to be executed for running the scheme.
But now the Finance Ministry wants NPCI to be out of this arrangement and directed LIC to operationalise the life cover through a MoU with banks.
FUNDING
LIC will create a fund for life coverage under PMJDY with an initial corpus of ₹ 100 crore from the social security fund of Government of India under Aam Admi Bima Yojana (AABY) being managed by LIC of India.
This will be recouped through budgetary provision by the Government, the Department of Financial Services (DFS) has said.
The fund will be replenished by Government from time-to-time within the stipulated premium amount to meet the outgo and administrative expenses.
This fund is separate from the Controlled Fund of the LIC. Contribution due for next scheme year will be based on actual claim payment, administrative expenses and any other permissible expenses pertaining to the scheme incurred by LIC and will be provided by Finance Ministry.
Sameer Kocchar, Chairman of SKOCH Group, said the Government should not give any budgetary support to recoup the LIC’s spend on life coverage under PMJDY.
“LIC should be asked to bear the entire cost for the life cover under Jan Dhan. There should not be any need for budgetary support to recoup the cost incurred by LIC. They (LIC) need to bear the cost as the Corporation had neglected the poor of India for the last sixty years”, he told Business Line.
Meanwhile, the Finance Ministry has now clarified that life cover benefit will not be available for those individuals who have been registered under AABY.
It has also specified that life cover benefit cannot be denied if the Ru-Pay card is still in the process of being issued.
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