[nb1981]

..and people call me a dreamer.

1. They will start saving: No. They won't. They will have what little money they have put into a system outside of their control and systematically syphoned away. 2. The benefits of saving are not something people need to learn; the benefits of saving money are harder to justify to someone who isn't already wholly dependant on it (and maybe even perceives it as a tool used against his people for centuries). 3. True, but I fail to see a major difference between a government and corrupt middle men. Most government people run businesses, is that the same in India? Conflict of interest? 4. The 2000's called...give it a couple years and whatever legislation you think protects the poor will be watered down, eroded away, or completely worked around.

The textbook justifications for predatory capitalism don't work anymore. I'm sorry, but the more involved the poor are in finance, the more they are preyed upon; because there is opportunity and reward. Taking candy from a baby.

"Positive-spillover". FFS.

[kramarao]

I grew up in rural India, where banks were non-existent. People kept the money locked up in houses or worse yet, lent to the local money lender, who may or may not pay on demand. The government in those days introduced postal savings plan, which helped people greatly. That was my introduction to banking as well. Here are some observations:

1. Banks were inaccessible to poor people. Too much paper work. Too far away. Too difficult to conduct business. I hope with new bank accounts all these are changing too.

2. Saving is not new. People save money; even poor people do save. But, then, if the savings are in women's hands, it is spent more wisely. Historically, the only way women could store the money was in gold. Eventually, gold itself because such a coveted possession, it's monetary value was not exploited for capital needs. Bank accounts may not have these problems.

3. Historically, the only reason rural folks went to bank is to take loans, under some government project. And, that had a big potential for corruption. People had to pay money to take the loans. The funny thing was the underlying assumption is that the borrowers need not pay money back, since the government will write it off, for some election purposes.

4. Money transfers for poor is new. I think that would work lot better. And, perhaps giving to women would make it work whole lot better. In my observation, there is lot of social and cultural conditioning in seeing the kids doing better than the parents, the mothers will try to put the money to use. Whether they have the financial education or not, different issue.

5. Any system will be exploited over time. I think it is important to shake them up every few years to disturb the existing power structures, especially in the relationship between the government and the people.

[nmridul]

You should understand that most of the banks that opened these accounts are Public sector banks (or Government Banks). And most of these accounts have no minimum balance requirements and not many surprise charges. And deposits in Government banks are guaranteed (insured upto a certain amount). So there is no question of the money getting siphoned off.

[codemod]

Totally agree... also.. government run banks make it difficult to get loans than private banks.. and even to this date older people tend to stay away from private banks because of hidden charges and surprises.

[eklavya]

So you are saying the government is going through all these troubles to hand over subsidies and benefits to the poor only to "syphon" it away?

You are forgetting people are being saved from the clutches of money lenders which have enslaved these people for a long time now. Now the poor have the opportunity to get a loan from the bank and a real insurance cover. This change can not be trivialized.

[hrjet]

+1 for moving away from the clutches of money lenders.

Though, the situation isn't that simple. Money lenders often accept undeclared assets as collateral. So for some people (the uneducated or the unscrupulous) money lenders are a boon, not a clutch.