Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

Week 7 : Essential Reading 2

Insurance : Government Schemes

INSURANCE SCHEMES OF GOVERNMENT OF INDIA

There are many types of insurance programmes set up by the Indian government to protect the
health, income, and well-being of its people in many areas. These plans, which include health
insurance, social security, and safety for farmers, are the foundation of the government's
dedication to growth and development for everyone.

The Pradhan Mantri Jan Arogya Yojana (PM-JAY) and the Central Government Health Scheme
(CGHS) are two well-known health insurance programmes. The PM-JAY aims to protect
vulnerable families financially from high medical costs, and the CGHS is mainly for central
government employees and pensioners. The Employees' State Insurance Scheme (ESIS) also
makes sure that workers in the organised sector can get medical care and other perks.

Life insurance programmes like the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and
the Pradhan Mantri Suraksha Bima Yojana (PMSBY) try to make life insurance economical for
people, especially those with low incomes. Policyholders and their families can feel safe about
their finances with these plans in case something unexpected happens.

To make sure that seniors and people who work in the unorganised sector have a steady source
of income, the government has started programmes like the Atal Pension Yojana (APY) and
the National Pension System (NPS). In the same way, the Pradhan Mantri Shram Yogi Maan-
dhan (PM-SYM) programme helps unorganised workers by giving them a salary when they hit
a certain age.

In agriculture, the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Weather Based Crop
Insurance Scheme (WBCIS) help farmers reduce their risks and get money when their crops
get destroyed by natural disasters or bad weather.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
1
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

The division of schemes according to their types :

Type Scheme Names

Health Insurance Pradhan Mantri Jan Arogya Yojana (PM-JAY), Central Government Health
Scheme (CGHS), Employees' State Insurance Scheme (ESIS)

Life Insurance Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri
Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Nidhi Yojana
(PMJNY), Pradhan Mantri Garib Kalyan Yojana (PMGKY)

Social Atal Pension Yojana (APY), Pradhan Mantri Shram Yogi Maan-dhan (PM-
Security/Pension SYM), National Pension System (NPS

Agriculture Pradhan Mantri Fasal Bima Yojana (PMFBY), Weather Based Crop
Insurance Insurance Scheme (WBCIS), Pradhan Mantri Fasal Bima Yojana (PMFBY)
for Kharif Crops, Pradhan Mantri Fasal Bima Yojana (PMFBY) for Rabi
Crops

Accident Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Insurance

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
2
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

HEALTH INSURANCE
❖ Pradhan Mantri Jan Arogya Yojana (PM-JAY)
➢ Introduction to PM-JAY: The Pradhan Mantri Jan Arogya Yojana (PM-JAY) was
launched in 2018 as the world's largest health insurance scheme. It targets over 12 crore
(120 million) economically disadvantaged families in India, providing free secondary
and tertiary care hospitalization. This initiative aims to alleviate the financial burden on
vulnerable populations and improve healthcare access.

➢ Key Features:

• Government-funded: PM-JAY is financed entirely by the Indian government,

making it a comprehensive healthcare program.

• Financial Coverage: Eligible families receive ₹5 lakhs (500,000 rupees) annually

for hospitalization expenses.

• Hospitalization Coverage: Secondary and tertiary care hospitalization for critical

medical conditions are covered.

• Network of Hospitals: Cashless treatment is available at empanelled public and

private hospitals nationwide.

➢ Benefits:

• Improved Access: Underprivileged families can seek necessary medical

treatment without financial constraints.

• Reduced Financial Burden: The scheme covers hospitalization costs, easing the
financial strain during medical emergencies.
© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
3
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Increased Healthcare Utilization: Easier access encourages preventive and

curative treatments, potentially enhancing overall health outcomes.

➢ Eligibility:

• Target Population: The scheme targets the bottom 40% of the population based
on the Socio-Economic Caste Census (SECC) data.

• Automatic Qualification: Individuals and families identified in the SECC data as

economically disadvantaged automatically qualify.

➢ Enrollment and Claim Process:

• Checking Eligibility: Beneficiaries can verify their eligibility through various

channels such as the Ayushman Bharat website, UMANG app, CSCs, and
Ayushman Mitra.

• Ayushman Card: Eligible individuals receive an Ayushman Card, which serves

as identification and claim document.

• Claiming Treatment: During hospitalization at an empanelled facility,

beneficiaries present their Ayushman Card for cashless treatment.

❖ Central Government Health Scheme (CGHS)

➢ Introduction to CGHS: The Central Government Health Scheme (CGHS) is a

healthcare program provided by the Indian government specifically for its central
government employees and their dependents.

➢ Key Benefits:

• Outpatient Department (OPD) Treatment: Consultation with doctors,

specialists, and super specialists, along with prescribed medication, is covered.

• Indoor Patient Treatment: Hospitalization in government or empanelled private

hospitals, including room charges, surgery costs, and medication expenses.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
4
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Diagnostic Tests: X-rays, blood tests, and other investigations are covered at
empanelled diagnostic centers.

• Maternity Benefits: Coverage for childbirth and related expenses is provided.

• AYUSH Medicines: Certain traditional Indian medicines are also covered under
CGHS.

➢ Eligibility:

• Central Government Employees: Both serving and retired employees are

eligible.

• Dependents: Spouses, unmarried dependent children, and dependent parents (if

financially dependent) of central government employees qualify for coverage.

➢ Availing CGHS Benefits:

• Enrolment: To avail of CGHS benefits, individuals need to submit an

application form at their designated CGHS Wellness Center.

• CGHS Card: Upon successful registration, a CGHS card is issued, serving as

identification for accessing benefits.

• Booking Appointments: Appointments for consultations or treatments can be

booked online, through the CGHS app, or directly at the wellness center.

• Availing Services: Present the CGHS card at empanelled hospitals, clinics, or

diagnostic centres to avail consultations, treatment, and medication without
bearing upfront costs.

❖ Employees' State Insurance Scheme (ESIS)

➢ Introduction to ESIS: The Employees' State Insurance Scheme (ESIS) is a social

security program in India aimed at providing medical and cash benefits to employees
and their dependents.

➢ Applicability:

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
5
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• ESIS is applicable to various establishments including factories, road transport,

hotels, restaurants, cinemas, newspapers, shops, and educational/medical
institutions.

➢ Eligibility:

• Employees earning up to ₹21,000 per month are covered under the scheme.

• Employees earning less than ₹137 per day as daily wages are exempt from
contributing their share.

➢ Benefits of ESIS:

• Medical Benefits: Coverage for both outpatient department (OPD) and

hospitalization expenses, including medicines, diagnostic tests, and surgeries.

• Cash Benefits:

• Sickness Benefit: Up to 75% of monthly wages for 90 days in a year,

subject to certain conditions.

• Maternity Benefit: Up to 100% of monthly wages for 26 weeks.

• Dependents' Benefit: Medical care for the insured employee's spouse

and dependent children.

• Funeral Benefit: Lump sum payment to the nominee in case of the

insured employee's death.

• Atal Beemit Vyakti Kalyan Yojana (ABVKY): One-time relief payment

of up to 90 days' wages in case of unemployment due to closure of
establishment or retrenchment.

➢ Funding:

• Contributions: The scheme is financed by joint contributions from employers

(4.75%) and employees (1.75%) of their wages.

➢ Enrolment and Claiming Benefits:

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
6
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Employers register their establishments with the Employees' State Insurance

Corporation (ESIC).

• Employees receive an ESIC card upon registration, serving as identification for

availing benefits.

• Benefits can be availed by accessing designated ESIC hospitals and

dispensaries.

• Claims for cash benefits can be submitted through the employer or online portal
provided by ESIC.

LIFE INSURANCE
❖ Pradhan Mantri Suraksha Bima Yojana (PMSBY)

➢ Introduction to PMSBY: PMSBY is a government-backed accident insurance scheme

in India aimed at providing affordable accidental death and disability coverage to
individuals.

➢ Benefits:

• Accidental Death Cover: A lump sum payment of Rs. 2 lakh is provided to the
nominee if the insured individual dies due to an accident during the policy year.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
7
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Permanent Total Disability: In case of permanent total disability resulting from

an accident (inability to perform any work), a lump sum payment of Rs. 2 lakh
is provided to the insured.

• Partial Permanent Disability: If the insured sustains permanent partial disability

(loss of function in a specific body part) due to an accident, they receive a
proportionate benefit based on the extent of disability.

➢ Eligibility:

• Age: Individuals between 18 and 70 years old (completed) with a valid savings
bank account in a participating bank or post office can enroll in PMSBY.

• Occupation: There is no restriction based on occupation.

➢ Enrollment:

• Individuals can enroll in PMSBY by visiting their participating bank or post

office and submitting the required application form.

• The premium is typically deducted automatically from the savings bank account
in one installment of Rs. 12 every year, subject to consent for auto-renewal.

➢ Key Points:

• Renewable Scheme: PMSBY is a one-year renewable scheme, with coverage

continuing automatically every year as long as the premium is deducted and
the eligible bank account remains active.

• Pure Accident Insurance: The scheme offers coverage only for accidental
death or disability and does not cover natural death or death due to illness.

• Accessibility: PMSBY aims to provide basic accidental death and disability

cover at a low cost, making it accessible to a large section of the population.

❖ Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

➢ Launched: PMJJBY was launched on June 1, 2015, as a government-backed life
insurance scheme in India.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
8
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

➢ Target Group:

• The scheme targets individual bank/post office account holders of participating

banks/post offices.

• Eligibility: Individuals aged between 18 years (completed) and 50 years (age nearer
birthday).

➢ Death Benefit: In case of the policyholder's death due to any reason (natural or
accidental), a sum assured of Rs. 2 lakh is paid to the nominee(s).

➢ Premium:

• The annual premium for PMJJBY is Rs. 330 per insured person.

• Premium payment is automatically deducted from the bank account linked to the
scheme.

➢ Enrolment:

• Individuals can opt for auto-debit while opening a new bank account.

• Existing account holders can visit their bank branch and express their interest in
enrolling for PMJJBY.

➢ Renewal:

• The scheme is automatically renewed every year on June 1st.

• Renewal is subject to the payment of the annual premium.

➢ Key Points:

• PMJJBY is designed as an affordable life insurance scheme to provide financial

protection to the family in the event of the policyholder's death.

• The scheme is administered by the Life Insurance Corporation of India (LIC) or other
designated life insurance companies.

❖ Pradhan Mantri Jeevan Nidhi Yojana (PMJNY)

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
9
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

➢ Launched: May 9, 2015.

➢ Target Group:

• Individuals aged between 18 years (completed) and 55 years (age nearer

birthday).

➢ Benefits:

• Maturity Benefit:

• Upon reaching the chosen maturity period (ranging from 36 years to 60

years), the subscriber receives a fixed monthly pension calculated
based on their contributions and chosen term.

• Maturity Benefit in Case of Death:

• If the subscriber passes away during the scheme's term, the nominee
receives the deposited amount along with accrued interest.

➢ Premium:

• Premium amount varies based on:

• Entry age.

• Maturity period.

• Desired pension amount.

• Minimum monthly contribution: Rs. 668.

➢ Enrollment:

• Individuals can enroll at designated bank branches and post offices across
India.

➢ Key Points:

• PMJNY is a government-backed pension scheme designed to provide a fixed

monthly pension to eligible individuals upon reaching maturity.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
10
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• It offers flexibility in choosing the contribution amount and maturity period,

catering to varied retirement needs.

• The scheme is beneficial for individuals seeking to build a retirement corpus

and secure a regular income post-retirement.

• Administered by Life Insurance Corporation of India (LIC) or other

designated life insurance companies.

❖ Pradhan Mantri Garib Kalyan Yojana (PMGKY)

➢ Launched: PMGKY was launched by the Government of India to address the issue of
black money and provide assistance to the economically weaker sections of society.

➢ Target Group: The scheme primarily targeted individuals who declared undisclosed
income under the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan
Yojana, 2016.

➢ Benefits:

• The scheme aimed to provide relief and assistance to those who declared
undisclosed income, offering them a means to regularize their assets and
contribute to the welfare of the nation.

• It provided a legal framework for individuals to declare their undisclosed

income and assets, ensuring compliance with tax laws and regulations.

• PMGKY also facilitated the utilization of the declared income for the benefit
of the economically weaker sections through various government initiatives
and programs.

➢ Premium: PMGKY did not involve any premium payment as it was not an insurance
or investment scheme but rather a tax compliance and welfare initiative.

➢ Enrollment: Individuals who wished to avail the benefits of PMGKY had to declare
their undisclosed income under the specified provisions of the Taxation and
Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016. The declaration

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
11
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

process and requirements were outlined by the government through official

notifications and guidelines.

➢ Renewal: PMGKY did not involve any renewal process as it was a one-time scheme
aimed at addressing the issue of undisclosed income within a specific period.

➢ Key Points:

• PMGKY was a significant step by the government to curb black money and
promote tax compliance among individuals.

• It aimed to provide relief and assistance to the economically weaker sections

of society by channeling declared income towards welfare programs and
initiatives.

• The scheme provided individuals with an opportunity to regularize their

undisclosed income and assets, ensuring transparency and accountability in
financial transactions.

• PMGKY operated within the legal framework of taxation laws and

regulations, offering a mechanism for individuals to fulfill their tax obligations
and contribute to the nation's development.

• The success of PMGKY depended on widespread awareness and participation

among individuals eligible to declare undisclosed income and avail the
benefits of the scheme.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
12
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

SOCIAL SECURITY/PENSION

❖ Atal Pension Yojana (APY)

➢ Introduction to APY: APY is a government-backed pension scheme in India aimed at

encouraging savings for retirement, particularly among individuals in the unorganized
sector.

➢ Benefits:

• Guaranteed Monthly Pension: Subscribers receive a fixed monthly pension

ranging from Rs. 1,000 to Rs. 5,000 upon reaching the age of 60, based on their
contribution tier and market conditions.

• Tax Benefits: Contributions towards APY are eligible for tax deductions under
Section 80CCD(1) of the Income Tax Act, 1961.

• Government Co-contribution: The government contributes 50% of the

subscriber's contributions (up to Rs. 1,000 per year) for individuals joining APY
between the ages of 18 and 30.

➢ Eligibility:

• Age: Individuals between 18 and 40 years old can enroll in APY.

• Occupation: While primarily targeted towards the unorganized sector, anyone

can join the scheme, regardless of occupation.

➢ Contribution:

• Pension Tier Selection: Subscribers choose a pension tier (monthly pension

amount) from Rs. 1,000 to Rs. 5,000.

• Monthly Contribution: The contribution amount varies based on the chosen

pension tier and the age of entry.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
13
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Payment Method: Contributions can be made through monthly installments via

a bank account or authorized collection centers.

➢ Key Points:

• Long-term Savings and Financial Planning: APY encourages individuals to

plan for their retirement by offering a structured savings mechanism.

• Guaranteed Regular Income: The scheme provides a guaranteed monthly

pension after retirement, ensuring financial security during old age.

• Corpus Accessibility: The accumulated corpus is not directly accessible until

reaching the retirement age. However, provisions for nominee benefits and
early exit with a reduced corpus exist under specific circumstances.

❖ Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM)

➢ Introduction to PM-SYM: PM-SYM is a voluntary and contributory pension scheme

introduced by the Government of India for unorganized workers, aiming to provide
financial security through a monthly pension after the age of 60.

➢ Benefits:

• Guaranteed Monthly Pension: Eligible subscribers receive a minimum assured

pension of Rs. 3,000 per month upon reaching the age of 60.

• Government Matching Contribution: The government matches the subscriber's

monthly contribution on a 50:50 basis, up to a certain limit based on the age of
entry.

• Low Monthly Contribution: Monthly contributions start as low as Rs. 43,

depending on the age of entry.

➢ Eligibility:

• Age: Unorganized workers between 18 and 40 years old are eligible to enroll
in PM-SYM.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
14
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Occupation: PM-SYM covers a broad range of unorganized workers across

various sectors, including rickshaw pullers, street vendors, construction
workers, agricultural workers, domestic workers, and more.

➢ Enrolment:

• Registration Channels: Enrollment can be done through Common Service

Centers (CSCs), participating banks, or facilitation centers set up by the
Ministry of Labour & Employment.

• Required Documents: Aadhaar card, savings bank account details, and

passport-size photograph are needed for enrollment.

➢ Key Points:

• Voluntary Scheme: Participation in PM-SYM is optional for unorganized

workers.

• Fixed Monthly Pension: The monthly pension amount is fixed at Rs. 3,000
regardless of the subscriber's total contribution.

• Family Pension: Spouse of the deceased beneficiary is eligible for a family

pension at 50% of the pension amount.

• Early Exit: Early exit is possible under specific circumstances, but it results in
a reduced pension amount.

❖ National Pension System (NPS)

➢ Introduction to NPS:

• NPS is a government-sponsored, market-linked pension scheme aimed at

providing retirement security for Indian citizens. It offers flexibility, portability,
and control over investments.

➢ Key Features:

• Portability: NPS accounts remain portable, allowing account holders to switch

jobs or cities without affecting their investments.
© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
15
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Investment Choice: Subscribers have control over asset allocation between

equity, corporate debt, and government securities, with options for active or
auto-choice investment management.

• Tier Structure: NPS comprises Tier I (mandatory, non-withdrawable until

retirement) and Tier II (voluntary, liquid) accounts, offering different levels of
flexibility.

• Tax Benefits: Contributions to both Tier I and Tier II accounts offer tax benefits
under various sections of the Income Tax Act.

➢ Eligibility:

• Age: Any Indian citizen aged 18-70 can open an NPS account.

➢ Contribution:

• Flexibility: Subscribers can decide the contribution amount and frequency, with
options for monthly, quarterly, or annual contributions.

• Minimum Contribution: The minimum contribution is Rs. 1,000 per year for
Tier I and Rs. 250 per contribution for Tier II.

➢ Benefits at Retirement:

• Lump Sum Withdrawal: Upon reaching the retirement age of 60, subscribers
can withdraw up to 60% of the accumulated corpus as a tax-free lump sum.

• Regular Pension: The remaining 40% must be used to purchase an annuity,

providing a regular pension after retirement.

➢ Key Points:

• Professional Management: NPS investments are managed by professional

pension fund managers regulated by the Pension Fund Regulatory and
Development Authority (PFRDA).

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
16
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Early Withdrawal: While there are restrictions on early withdrawal from Tier I
accounts, withdrawals in specified circumstances are allowed subject to
conditions.

• Additional Benefits: NPS subscribers may gain access to various government-

sponsored social security schemes.

AGRICULTURE INSURANCE

❖ Pradhan Mantri Fasal Bima Yojana (PMFBY)

➢ Introduction to PMFBY:

• PMFBY is a government-sponsored crop insurance scheme in India aimed at

providing financial assistance to farmers in the event of crop losses due to
various natural calamities and unforeseen events.

➢ Key Features:

• Coverage: PMFBY offers insurance cover against natural calamities like

drought, flood, hailstorm, and pest attacks, as well as certain unavoidable
situations like locust and wildlife attacks.

• Eligibility: All loanee and non-loanee farmers cultivating notified crops in

notified areas are eligible to participate.

• Premium: Subsidized for loanee farmers, with the government contributing a

share. Non-loanee farmers pay the entire premium themselves, with the amount
varying based on crop, season, and location.

• Claim Process: Farmers can file claims if crop losses exceed pre-determined
thresholds, with claims settled by insurance companies.
© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
17
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

➢ Benefits:

• Financial Support: Provides farmers with financial assistance to recover from

crop losses, ensuring some income and sustaining agricultural activities.

• Loan Repayment: Assists loanee farmers in meeting loan repayment obligations

even in case of crop failures.

• Stability: Offers financial security and stability to farmers, promoting

agricultural sustainability and food security.

➢ Implementation:

• Implemented by the Ministry of Agriculture and Farmers' Welfare in

collaboration with state governments and insurance companies.

• Farmers can enroll through village revenue offices, banks, or agricultural

extension offices.

➢ Key Points:

• Subsidy: The extent of government subsidy for loanee farmers may vary based
on crop, scheme version, and state.

• Enrollment: Timely enrollment is crucial to ensure coverage and claim

eligibility.

• Limitations: PMFBY covers yield loss only due to specific insured events and
does not cover losses from other causes.

❖ Weather Based Crop Insurance Scheme (WBCIS)

➢ Introduction to WBCIS:

• WBCIS is a unique government-backed insurance program designed to protect

farmers from financial losses caused by adverse weather conditions.

➢ Key Features:
© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
18
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Triggers and Coverage: Covers specific weather parameters like deficient or

excess rainfall, high or low temperatures, frost, and unseasonal rainfall, with
predetermined trigger points for payouts.

• Payouts: Fixed payouts are provided if weather parameters cross predefined

thresholds during the insured period, irrespective of actual yield loss.

• Area Approach: Utilizes an area-based approach for claims settlement based

on weather data for a specific region, simplifying the process and reducing
administrative costs.

• Faster Settlement: Offers faster claim settlements compared to traditional crop

insurance, providing quicker financial relief to farmers.

➢ Benefits:

• Financial Security: Provides farmers with financial security against

unexpected weather events, ensuring some income even in bad weather years.

• Stability: Encourages continued investment in agriculture and promotes food

security by ensuring farmers' financial stability.

• Simplified Process: The area-based approach and predetermined triggers

simplify the claim process for both farmers and insurers.

➢ Eligibility:

• Farmers: Primarily targeted towards farmers cultivating cereals, pulses, and

oilseeds, with specific crop coverage varying by state and season.

• Landholding: Generally applicable to small and marginal farmers, with

eligibility criteria varying across states.

➢ Implementation:

• Implemented by state governments in collaboration with insurance companies.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
19
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Farmers can enroll through designated centers like gram panchayats or

agricultural extension offices, with premiums subsidized by the government to
make the scheme affordable.

➢ Key Points:

• Not a Yield Guarantee: WBCIS does not guarantee against yield loss but
serves as a safety net against specific weather extremes.

• Limited Coverage: While offering protection against specific weather events,

it does not cover all risks associated with agriculture.

• Complementary Option: WBCIS can be considered alongside other crop

insurance schemes for more comprehensive coverage.

❖ Pradhan Mantri Fasal Bima Yojana (PMFBY)

Kharif Crops:

• Coverage Period: Typically, from June to September, coinciding with the monsoon
season in India.

• Eligible Crops: PMFBY covers a wide range of Kharif crops, including:

• Food grains: Rice, maize, pulses (tur, urad, moong, etc.)

• Oilseeds: Groundnut, soybean, sesame, cottonseed

• Commercial crops: Cotton, sugarcane, jute, etc.

• Seasonality Discipline: Farmers need to enroll separately for Kharif season insurance
from Rabi season insurance.

Rabi Crops:

• Coverage Period: Typically, from October to March, following the Kharif season.

• Eligible Crops: PMFBY covers various Rabi crops, such as:

• Food grains: Wheat, barley, oats

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
20
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

• Pulses: Gram, lentil (masoor)

• Oilseeds: Mustard, rapeseed

• Commercial crops: Potato, onion

Key Points:

• Specific crops covered and their insurance details may vary across states due to diverse
agricultural practices and regional considerations.

• It's crucial to consult local agricultural authorities or insurance company representatives

to get specific information regarding PMFBY coverage, premiums, and claim
procedures for the particular crops and regions relevant to you.

• Enrollment deadlines for both Kharif and Rabi seasons typically fall before the start of
the respective season. Ensure timely enrollment to ensure coverage and claim
eligibility.

ACCIDENT INSURANCE

❖ Pradhan Mantri Suraksha Bima Yojana (PMSBY)

➢ Initiation Date: Pradhan Mantri Suraksha Bima Yojana (PMSBY) was launched on
May 9, 2015, by the Government of India.
➢ Target Group: The scheme is designed to cater to individuals aged between 18 years
(completed) and 70 years (age nearer birthday). It is open to those holding bank or post
office accounts in participating institutions.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
21
 Banking and Insurance

Dr. Ruchi Jain

Week 7_E2

➢ Benefits: PMSBY provides financial coverage in the event of accidental death or

disability:
• Accidental Death: In the unfortunate event of the insured's accidental death, a
lump sum amount of Rs. 2 lakh is payable to the nominee(s) designated by the
insured.
• Permanent Total Disability: If the insured suffers permanent total disability
due to an accident, they receive a lump sum of Rs. 2 lakh.
• Partial Permanent Disability: In case of partial permanent disability resulting
from an accident, the insured receives a lump sum of Rs. 1 lakh.
➢ Premium: The scheme offers affordable coverage with an annual premium of just Rs.
20 per year per member. This premium is deducted automatically from the bank account
linked to the scheme.
➢ Enrollment: Individuals can enroll in the PMSBY scheme by opting for auto-debit at
the time of opening a new bank account or by expressing their interest in existing
accounts. Enrollment is typically facilitated through participating banks and post
offices.
➢ Renewal: PMSBY enrollment is renewed automatically every year on June 1st, subject
to the payment of the annual premium. This ensures continuous coverage for the insured
individuals.
➢ Administration: The scheme is administered by Public Sector General Insurance
Companies (PSGICs) and other General Insurance companies authorized by the
Government of India. These entities manage the operations related to enrollment,
premium collection, claims processing, and disbursal of benefits to the insured
individuals or their nominees.

© All Rights Reserved. This document has been authored byDr.Ruchi Jain and is permitted for use only within the course "Banking and
Insurance” delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures,
scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording or otherwise – without the prior permission of the author.
22