Government approves NAREGA cards for opening bank accounts

Government has approved the NAREGA job cards, issued to the rural poor, as valid document for opening bank account under ‘Know Your Customer’ (KYC) norms for banks. This decision will have major implications for the rural poor. This has accorded the NREGS job cards a status similar to that of a passport, a driving license, PAN card and Voter Identity Card for the purpose of opening a bank account. It will give rural poor a much easier access to financial services by banks.

The Rural Development Ministry had written to the state governments last week to update the job cards issued already to over 10 crore households in the country. This letter was meant to avoid any discrepancies regarding the details of job card holders. It had asked the state government to ensure that the job cards contain the signature of the concerned authorities in addition to the photographs and signature of the job card holders. All this exercise was to ensure that the issued cards are valid under KYC norms.

So far, 7.33 crore NAREGA bank and post office accounts have been opened in the country but only about half of these are bank accounts. This move of the government will allow the rural poor getting payment from post office account and use their job card to open bank accounts.

Certain documents are required to open a bank account under the guidelines issued by RBI. The guidelines were issued under Prevention of Money Laundering Rules, 2005 and were adopted as a step towards combating the finance the terrorism. Though, there are speculations that this addition of the NREGA cards to the valid documents for opening a bank account may prove dangerous as authorities in the states, particularly Northeastern states, have warned of the participation of illegal Bangladeshi immigrants under the scheme. Authorities fear that the move may enable illegal migrants to access banking networks in the country.