26 Differences/Similarities: Commercial Vs. Co-operative Banks

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There are 4 different categories of banks in India. These include:

  1. Commercial Banks – Includes scheduled and non-scheduled banks
  2. Co-operative Banks
  3. Regional Rural Banks
  4. Payment Banks – This new category of the bank was very recently approved by the Reserve Bank of India.

Although most of the banks offer similar kind of services; there are key differentiating factors. In this article we’ll discuss the differences between commercial and co-operative banks.

Listed in the below table are the similarities and differences between these two categories of the banks:

Sr. No.FeaturesCo-operative BankCommercial Bank
1Governed by whomCo-operative Societies Act of respective state and Banking regulation actBanking Regulation Act
2Functioning objectiveGoal is mutuality and self help. Profit is not the objectiveWealth generation
3Is there any voting power to borrowersYesNo. Borrowers are account holders.
4OwnershipMembers of co-operative societyShare holders
5Regulatory BodyReserve Bank of IndiaReserve Bank of India
6Interest rate on loanLowHigh
7Interest offered on depositsLowHigh
8Prepayment charges on loansNilYes
9Processing charges on loansNilYes
10Quantum of loan amount offeredLimitedCan be very high
11Loan disbursal processing timeSlowFast
12Eligibiiity criteria to get loanNot very strictVery strict
13Is membership required to avail loanYesNo
14Credit score checkYesYes
15Shares of bank required to get loan?YesNo
16Most prominent inMainly rural areas. But they also operate in urban areasMainly urban areas. But also operate in rural areas in small scale
17Range of services offeredLimitedBroad
18Credit recoveryWeakVery strict
19Operating scaleSmallLarge
20Area of operationLimited to city/state and to some extent outside of stateAcross country and outside India
21Target audienceMainly to farmers, small businessmen and rural industries.Mainly to individuals and businesses
22Governing ActCooperative Societies Act, 1965Banking Regulation Act, 1949
23Funds availabilityLimitedMassive
24Are they nationalised?NoYes
25Do they operate mutual fundsNoYes
26Who regulates lending and deposit ratesRespective banksRBI

The ultimate objective of all these banking entities is to increase financial inclusion by reaching people from remotest locations in India and offer various services such as loans, savings account, money transfer, credit cards and many others.

 

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Aadhaar Card for IT Return, Insurance, Mutual Funds

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With an objective of providing unique identity to every Indian, Aadhaar card was launched in 2009. The project is implemented by Unique Identification Authority of India (UIDAI). The benefits of Aadhaar are many and especially poor people can get benefits from the following (there are many):

  • Jan Dhan Yojana, cooking gas subsidy
  • Healthcare schemes such as RSBY, Janashri Bima Yojana, Aam Aadmi Bima Yojana
  • Social security schemes
  • Food and nutrition schemes such as mid-day meals, food security

We’ll now explore how having Aadhaar card will help you in financial transactions apart from the above listed ones:

  • Buy Insurance Policy: Submitting KYC documents is not required. For buying policy, visit the insurance company website and select the online policy. Then enter all the required details. After entering Aadhaar number, some of your personal information will be fetched automatically and displayed on the screen. You can then buy insurance policy online without submitting physical copies of KYC documents.
  • E-verifying income tax: By doing this, there won’t be a need to file Income tax return verification form physically to the Income tax department office in Bengaluru. This is for the individuals with Aadhaar card verified by the electronic verification certification (EVC) system. For doing this:
  1. You will have to link Aadhaar and PAN on the income tax website: www.incometaxindiaefiling.gov.in.
  2. Go to e-filed returns and choose form, click on e-Verify
  3. Next step is generating Aadhaar OTP for verifying return
  4. Once you receive an OTP, you can complete the remaining process.

The existing option of sending ITR-V form manually to the IT department is time consuming. And with Aadhaar linking, time will be saved as verification will be done electronically.

  • Mutual funds investment: With Aadhaar it is possible to invest online when PAN card is not KYC compliant. For doing this, individual needs to visit KYC registration agency website and provide required details such as PAN card, asset management company name, details of bank account through which funds transaction will take place. Provide Aadhaar card number and 10 digit mobile phone number. System will send OTP on this mobile. Enter this OTP on Aadhaar authentication section of the website, upload attested copy of e-Aadhaar. You can also perform this process on the website of mutual fund company.
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UWIN Card: Benefits, Features, Social Security Schemes

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Despite of various social security schemes in India, it is not reaching the workers from unorganised sectors as expected due to the lack of awareness of their benefits. This is resulting in such schemes are not meeting their purpose.

Keeping this mind, government of India is going to launch UWIN card (Unorganised Workers’ Identification Number) for these workers.

  • It is a smart card scheme especially for workers from unorganised sector.
  • Through this, card holders can avail benefits of various social welfare schemes.
  • Condition is that these workers should not be a part of Employees Provident Fund Organization or Employee State Insurance Corporation.
  • It will be a chip based card and 40 crore workers would get benefit.
  • 88% of India’s population work in unorganised sector.
  • This scheme would be launched in phases and in the initial phase target is to issue 10 crore UWIN cards.
  • Every state will launch awareness programs of this card.
  • Technology for this card will be provided by NIC.

Card is expected to bear the following details of the worker along with UWIN card name and logo:

  • Name
  • Photo
  • Date of birth
  • Gender
  • Aadhar number
  • Unique ID
  • Card issuing authority

What are the unorganized sectors in India?

  • Unorganised sector are those enterprises (proprietary or partnership) having less than 10 workers.
  • Few sectors include forest workers, tribal workers, fishing, handloom, sweepers, construction, mining, transportation etc.
  • These sectors do not have much regulations or provide protection to their workers.
  • Such workers are not aware of risks in their job and are often exploited due to extended working hours, improper safety measures, low wages, unhealthy working conditions and others.
  • Most importantly they are not aware of the social security benefits and how to avail them.

Which are the social security schemes in India?

There are various social security schemes in India covering health, insurance, pension, banking and others which includes:

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Startup India Event 2016: Tax Benefits, Other Announcements

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Last year i.e 2015, on the eve of Independence Day India’s honourable Prime Minister Shri Narendra Modi had announced the ‘Start Up India, Stand Up India’ initiative. And today i.e. on 16th Jan 2016, it was the time to announce the action plan. In order to give entrepreneurs from every corner of India, from poorest section of the society and support early stage start-ups, blue-print for start-ups was unveiled.

Key announcements made during the Startup India Standup India action plan:

  1. Start-ups will be exempted from paying income tax on their income for the first 3 years
  2. 80% rebate on filing a patent application.
  3. Fast track mechanism for patent applications
  4. Exemption of tax on capital gain. When person invests its own wealth, then they will get exemption from capital gains tax.
  5. Mobile app will be launched on April 01, 2016 which will enable start-ups to get registered within a day. The app will have a small application form for registration.
  6. Web portal will be launched on April 01, 2016 for clearances, approvals, and registrations
  7. Compliance regime based on self-certification
  8. No inspection for 3 years of start-up businesses in respect of labour, environment law compliance post self-certification
  9. Easier norms for start-ups to exit within 90 days. Bill will be introduced in the parliament.
  10. Relaxed norms of public procurement for start-ups. There would be no requirement of turnover or experience.
  11. Government will setup a fund with an initial corpus of Rs. 2, 500 crore and total corpus of Rs. 10, 000 crore over a period of 4 years
  12. A hub for startup India will be started with single point of contact.

Here are the challenges enterpreneurs currently face in India while setting up their new ventures which hampers the growth:

  • Getting access to funding from financial institutions easily
  • Too long and cumbersome process to get access to resources such as getting license, registration, land etc.
  • Tough regulatory compliance norms and clear the regulatory issues
  • Tougher tax regime

Vision of Start-up India:

  • Make India, start-up capital of the world
  • Providing ease of access to funding from banks by easing the tax rules or providing concessions to the start-ups
  • Ease of getting licenses, land and others
  • Clearance of regulatory hurdles in a speedy manner
  • Role of states will be reduced and Department of Industrial Policy & Promotion (DIPP), Government of India will act as facilitator to these entrepreneurs.
  • Encouraging innovation
  • Create pool of young entrepreneurs
  • Making India a growth engine

How it will benefit India:

  • Increase employment. More and more jobs in every industry such as IT, manufacturing and other sectors.
  • Increase funding from foreign investors
  • All these will add fuel to the Indian economy due to the increased investments which currently is hampering the growth and restricting the employment opportunities.

This mega event was attended by CEOs of top startups and over 150 budding entrepreneurs.

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Reactivate, Inoperative/Dormant Bank Account: Documents, FAQs

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What is an inoperative/dormant bank account?

Any account (savings or current) in which there is no transaction for a period of two straight years is considered as inoperative account. In such kind of dormant account, no further transactions can be carried out by the account holder as per RBI’s rule.

There could be many reasons why an account can become inoperative:

  • Person holds too many account and forgets to use.
  • Account holder is out of country and feels no need to make the use of account in India. OR
  • No longer uses the bank’s service but continues to keep the account. OR
  • Passes away and their legal heirs are not aware of his/her bank account
  • Goes missing

But what if the account holder wants to re-activate the account? Is it possible?

Answer is YES. And here’s how:

File a written application: Once you confirm that your account has become inoperative, contact the bank’s branch manager and make a written application. Ideally bank’s have a standard application format for account reactivation requiring following fields:

  • Whether application is made by self/nominee/legal hier/others
  • Name of the deposit holder
  • Communication address
  • Signature
  • Address
  • Contact number

You will need to request for revalidation. Along with this, you also need to provide the reason for keeping the account inactive. Banks, in return, will provide acknowledgement slip consisting of seal and signature of the bank.

In case, you hold joint account, the signature of the other person would also be required.

But before starting the process of reactivation, contact the customer care of the respective bank and collect all the required details/steps for activating the account. Doing this, will save your time and the inoperative account will become active fast. Only in case of NRI, reactivation request via online facility is taken into consideration.

Documents required to activate the inoperative bank account:

All know your customer (KYC) documents as mentioned below has to be re-submitted:

  • Address proof: Driving license, latest utility bills, passport and others
  • ID proof
  • Passport sized photograph

Documents required might slightly vary for each bank but banks scrutinize all the details to make sure fraudulent activity is not happening. But documents required would mostly be the same as mentioned above. Some banks may also ask to surrender old ATM cards and cheque book.

Once all the processes are done, your account will become active within 6-7 working days.

What to do after your account becomes active?

The very first thing to do is make some kind of transaction. You can either deposit some money into the account or transfer fund to someone.

Is there any charge for account activation?

As per RBI’s guidelines, banks are not allowed to charge money to activate the inoperative account.

If minimum balance is not maintained, what is the penalty fee?

Banks are also not allowed to charge minimum balance penalty.

What if fixed deposit interest is still getting credited. Does the account still become inoperative?

Answer is NO. But the condition is that the interest should get credited on a regular basis.

Does account holder loses the interest accrued on saving account?

Answer is NO. The interest earned on savings account will continue to get credited irrespective of whether the account is active/inoperative.

What if dividend cheque is credited into the account in two years?

In such a case, account will not considered inoperative if dividend gets credited in the savings bank account.

What happens to the dormant account in case of account holder’s death?

Legal heir needs to contact bank for settling the claim. Banks will then follow rules and regulations.

What is account holder goes missing or his whereabouts could not be traced?

Banks will then approach the referring person who introduced the person to open the account or contact the employer or any person whose details are available in the bank’s record.

During inoperative period, can the account holder use ATM/cheque/internet banking facility?

Answer is NO.

How to know whether the account is inoperative?

In order to validate whether the account is really inoperative or not, account holder should visit bank’s website and search whether the account is inoperative. Ideally every bank is expected to maintain record of every bank account which has become inactive. Here’s how to search whether the account is inactive or not on the website of prominent Indian bank’s:

State Bank of India
ICICI Bank
HDFC Bank
Canara Bank

Suggestion: If you do not wish to continue using the account then it is best recommended to close it.

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Financial Inclusion Schemes: PMSBY, PMJJBY, PMJDY, SSA, APY, Suraksha Bandhan Scheme

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Over last one year, government has launched various flagship social security schemes with an objective of broadening financial inclusion in India. This was done to make financial services such as banking, insurance, and others available to the Indian citizens especially from the low & middle class category at an affordable cost and make them financially secure. And lots of efforts are being taken to increase the subscribers under each of these schemes. So let’s check out the various financial inclusion schemes in the form of insurance, pension, savings account and others which were launched:

Pradhan Mantri Suraksha Bima Yojana:

Considered to be the cheapest accidental death cum disability insurance policy with an annual premium of just Rs. 12, it has received a massive positive response from most of the Indians. Although the insurance cover is small which is Rs. 2, 00, 000 for accidental death and Rs. 1, 00, 000 for partial disability but considering the fact that nearly 80% of the country’s population do not have any insurance, the scheme has evoked a very good response as it will further increase the insurance penetration to the remotest locations of India. Till now, due to high annual premium by private insurance companies not everyone was able to buy policy. But this has become possible with Suraksha Bima. Get to know the details of PMSBY.

Pradhan Mantri Jeevan Jyoti Bima Yojana:

Similar to PMSBY, PMJJBY is also the cheapest life insurance policy with an annual premium of Rs. 330 and moreover it does not require medical examination. The cover offered under the yojana is Rs. 2, 00, 000 and the termination of policy takes place after the policy holder reaches the age of 55 years.

Objective of both PMJJBY and PMSBY is to provide financial security to the family of policy holder in an event of his/her death.

Atal Pension Yojana:

This pension scheme was launched with a sole purpose of providing pension to the workers from unorganized sector after the retirement to meet their daily needs. Contribution can be done monthly/quarterly/every 6 month and equal amount will be contributed by the government of India with an option to prematurely exit from the scheme before the age of 60 years. Pension amount receivable would be in the range of Rs. 1,000-Rs.5, 000. Detailed information on APY is available here.

Jeevan Suraksha Bandhan Yojana:

This scheme is a Raksha Bandhan gift and is launched with an objective to drive PMSBY and PMJJBY. Through this yojana, brothers can gift social security schemes to their sisters by purchasing gift card worth Rs. 351 and deposit scheme worth Rs. 201 which will be used for making the premium payment for Suraksha Bima Yojana and Jeevan Jyoti Bima Yojana. Apart from this, term deposit scheme worth Rs. 5001 can also be taken which will serve two purposes – premium payment for PMSBY and PMJJBY for the first year and remaining money would be investment for term deposit for 10 years. Read details of Suraksha Bandhan Yojana.

Pradhan Mantri Jan Dhan Yojana:

Opening zero balance saving account for every unbanked Indian household was the main objective behind the launch of PMJDY. Overdraft facility of Rs. 5,000 is also available provided the account is kept active for 6 months after opening. Some banks are also opening account to existing customers whereas majority of them have restricted to only those with no bank account. Explore features of PMJDY.

Sukanya Samriddhi Yojana:

With a mission to secure the financial future of the girl child, this small savings scheme SSA – was launched under the Beti Padhao Beti Bachao initiative. For the current year i.e. 2015-2016, the interest rate offered is 9.2%. For e.g. in this scheme if you invest Rs. 20,000 for 14 years, the maturity amount will be Rs. 10, 67, 528 (assuming 9.2% interest). Check out table containing investment amount and maturity amount for SSA.

Parents or local guardians can open account in the name of the girl child at post offices or various banks designated by Reserve Bank of India. Moreover the interest income and investments are eligible for tax deduction under section 80C of Indian income tax act, 1961 and the scheme matures once the girl child reaches the age of 21 years. For opening the account, initial deposit of Rs. 1,000 has to be made. And next year onwards, deposit can be made for amount ranging from Rs. 100 to Rs. 1, 50, 000. Premature withdrawal is possible only when girl gets married before the maturity. The interest rate would be declared by the government every year. When the scheme was launched in the year 2014-2015, the interest offered was 9.1%.

It is now our duty to further spread the awareness of these schemes so that Indians located in remotest places can get basic access to financial services at an affordable rate.

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SBI mCASH: How to Claim, Transfer Money, Charges

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In order to make life of it’s customers easy and convenient, State Bank of India has started money transfer facility called mCASH for claiming the money sent through SBI’s online banking facility or anywhere. The service can be used for money transfer to bank account within SBI (any branch) or other account in another bank. For this, customer needs mobile number or E-mail ID of the beneficiary and there is no need of bank account details of the beneficiary.

Requirement

Customer should have SBI online banking facility enabled in order to send money. Also the transfer is possible within SBI group or IMPS enabled banks.

How to Transfer

As mentioned above the transfer process is very simple and only details required are beneficiary’s mobile number or E-mail ID. No need of bank account details such account number, IFSC code etc. which are normally required when transferring the funds.

Charges: Minimum charge for each transaction is Rs. 2.50

Transfer Limit: Rs. 1,000 per transaction and Rs. 2,000 per day per user.

How can beneficiary claim money and other requirements: Beneficiaries should have bank account and they can receive money in 2 ways depending on the option chosen by the sender as follows:

  • Through mobile banking application (mCASH) which needs to be installed on their mobile phones with Android and Apple iOS and Blackberry.
  • Link sent on E-mail
  • Along with this, 8 digit passcode will also be sent to the receiver which needs to be entered on the SBI mCASH link available before pre-login of online SBI or mCASH mobile application for claiming the funds.
  • After this, beneficiary needs to enter account number, IFSC code, passcode, choose from the 2 options: E-mail ID and mobile number and enter the same.

When does money get transferred: It is instant and funds are transferred in the real time.

Is the transaction Secured:

SBI claims that the mCASH app is extremely secured as none of the details are saved in the mobile phone and SSL encryption is used. Also if the app is unused for more than 5 minutes, it gets closed automatically.

Other features of this app:

The mobile application also has functionality to save the account number and IFSC code through the “Favourites” section.

Here are the images of mCASH app:

SBI mCash AppSBI mCashClaimSBI mCash App - ClaimSBI mCash - Add to

 

 

 

 

 

 

 

 

Request to the readers: Please mention your feedback about this app through the comments section below.

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SBI INTOUCH Card Benefits, Charges, Transaction Limit

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State bank of India which is India’s biggest bank has launched contactless debit card sbiINTOUCH Tap and Go Debit card and SBI signature contactless credit card which will make transactions faster and more secured. This will also replace cash transactions normally seen in India at retail merchants, petrol pumps and at other places. Card and PoS terminals will have the logo [ )))) ]. Here is the review of contactless card:

Benefits:

  • No need to swipe or dip the card
  • Fraud Coverage: Increased security is provided for signature contactless credit card holder. Under this, card holder will get an emergency card replacement in case of theft, loss etc. In addition to this, Rs.1, 00, 000 of fraud liability cover will also be provided.
  • Fast, hassle-free and secured payment

How to use In Touch card to make payment:

  • Retailer will first enter the purchase amount.
  • User needs to just wave/tap the card over the PoS terminal at a distance of 4cm of the contactless card reader for nearly half a second.
  • After waving, four green lights will be displayed and message will be displayed, which means that payment is successfully done.
  • Once payment is made, card holder will receive confirmation message on his mobile number and registered E-mail ID.

Charges:

  • No issuance charges for the first year
  • Next year onwards a fee of Rs. 150 charged every year
  • Annual maintenance charge

Transaction Limit: Rs.2, 000 per tap. However this might be further increased so that customers will not have to tap multiple times if purchase amount is greater that Rs. 2,000.

How to get this card: For this, customers will have to apply at SBI. Existing card holders can also upgrade their existing card to sbiINTOUCH card.

Where can you use the card?

  • Point of Sale terminal
  • Restaurant
  • Travel ticket booking centers and many other places where such card payments are accepted.
  • Can be used internationally at ATM’s or PoS
  • Card can also be used for cash withdrawal at ATM

Is contactless card secured?

Now the most important question, are the contactless secured. They are highly secured due to the underlying technology NFC (Near Field Communication). This technology is used for data transfer in mobile phones.

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5 Easy Steps to Get Credit Score from CIBIL @ Rs. 500

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When you apply for a loan at any lender, the very first thing they will check is whether you are credit worthy.

So the question is how lenders check whether an individual is credit worthy or not?

They do this by getting credit information report (CIR) from Credit Information Bureau of India Limited (CIBIL) containing credit score and other details personal, employment, bank account information and enquiry details of the borrower. Based on these details, lenders then decide whether or not any individual or company is credit worthy. In most of the cases, credit score is enough for assessing any individual’s repayment ability. An individual’s credit score is the number ranging between 300 and 900. Higher the credit score, higher is the chance of getting approval for the loan or credit card. Check out how to dispute mistakes in credit report.

What is CIBIL:

It is India’s first authorized repository which has borrowing details of every person and company. Lenders such as banks or financial institutions are the members of CIBIL and they both work in conjunction i.e. when a loan is approved by any lender they provide all the details: loan/credit card taken, payments due, payments done on time or not, number of default payments etc. details to the CIBIL.

After receiving these details, CIBIL calculates and assigns a credit score which is in the range of 300-900 using statistical methods. CIBIL also collects data from various other sources. When requested, CIBIL provides credit information request of the borrower to the money lenders. Based on this report, lenders take a decision on whether to approve a loan or not, how much credit to be given, interest rate to be charged and others. Of course there are many other factors taken into consideration before approving any loan or credit card.

How can you check CIBIL credit score?

Before applying for a loan or credit card, it is worth recommended for you to check credit score beforehand from CIBIL. Based on the score, you can make a judgment on whether or not loan/credit card application would be approved or not. Of course there are many other factors banks will check before approval apart from credit score. Even if you are not applying for any kind of a loan or credit card Rs. 500 is worth spending. Because you will get credit score and based on that you will start thinking about building your score which will help you in the future when applying for any type of loan or credit card. If you are a first time credit card applicant, check out how you can get the card.

The charge to get credit score from CIBIL is Rs. 500 and you can make this payment either using credit card/debit card/net banking. In order to get your credit score online, visit CIBIL website https://www.cibil.com/online/credit-score-check.do and provide following details:

    1. Whether you want CIBIL transunion score
    2. Personal Details: Full name, date of birth, gender, ID proof & number (PAN/Driver’s licence/passport/Voter ID)
    3. Contact details: Address, mobile/home phone, and E-mail ID. Once these mandatory details are entered, you will receive details on your registered E-mail ID.
    4. Make payment: Then you need to make a payment of Rs. 500.
    5. Authentication: After this, authentication is required and you will have to answer 3-5 questions on existing loan or credit card details. Remember to enter these details correctly otherwise your authentication will fail. Once all the details are entered correctly, you will receive your personal credit score on your registered E-mail ID on the same day by CIBIL. You can keep all these details handy so that the process will be much faster for you.

In case authentication fails then you can re-enter details and CIBIL will send your credit score on the registered address via express delivery service.

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6 Benefits of Linking Aadhaar Card to Bank Account

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Aadhar card number is a 12 digit unique identification number (UID) issued by UIDAI to every Indian resident which has many benefits. In addition to this, customer can also link Aadhar number to the bank account and receive various benefits. For this, account holder needs to provide consent for seeding his/her Aadhar card number to their bank account. Both the new and existing customers can link Aadhaar and account.

Benefits of linking to the account holder

The most important benefit of seeding the number is receiving the social welfare scheme payments, and other benefits from various schemes run by government of India. Here are the schemes:

  1. Direct Benefits Transfer (DBTL): LPG cylinder subsidy amount is directly credited in the Aadhaar linked bank account after the LPG consumer number is linked. The difference between market price and subsidised rate is credited which is the subsidy amount. You can also opt out of LPG subsidy which will benefit the government monetarily.
  2. Subsidy for commodity products: Also the subsidy for various commodity products such as kerosene, sugar, rice, pulses and many other products whose prizes are subsidized are also transferred to the linked account.
  3. Mahatma Gandhi National Rural Employment Guarantee (MNREGA): Wages under this scheme will also be credited directly to the bank account of the workers.
  4. Tribal welfare schemes: Payments from these schemes will also be credited to the linked account.
  5. Scholarship: Students who receive scholarship from the government can get this money only if bank account which is on the name of the student is linked with their Aadhaar number. However this is mandatory only for the students from select Indian states.
  6. Country wide access: Linked accounts are accessible from any place within India and in future, consumers will be able to access via ATMs, others.

Check out why Aadhaar card is important – other benefits

Benefits to the government:

It is not that only Indian citizens are getting benefits of linking the card. Government too has advantages as the welfare subsidies are sent to the correct beneficiary. Earlier due to non-availability of the identity, benefits were claimed by fake persons who duplicate the identity. This results in poor and disabled person not receiving the benefits. So by seeding the number, government’s money will reach to the genuine person.

List of Aadhar enabled banks:

Almost all the Indian banks have stared facility of linking Aadhar card for their customers and here are few of them:

  • Federal Bank
  • Axis Bank
  • State Bank of India
  • Shamrao Vithal Co-operative Bank
  • Andhra Bank
  • HDFC Bank
  • IDBI Bank
  • Bank of Maharashtra
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