Ancillary Services, Insurance and Financial Inclusion
This domain covers services beyond deposits and loans, the insurance products distributed through banks, and the main financial-inclusion schemes and channels.
Ancillary services
Banks provide remittances through demand drafts and NEFT, safe-deposit lockers, letters of credit, bank guarantees, foreign-exchange services, factoring, mutual-fund distribution and bancassurance. A letter of credit reduces payment risk in trade; a bank guarantee assures performance.
Insurance
Insurance is regulated by IRDAI. Life insurance covers death and survival risks; general insurance covers fire, marine, motor and health. Bancassurance is the distribution of insurance products by a bank as a corporate agent; the bank does not underwrite the risk. Pradhan Mantri Jeevan Jyoti Bima Yojana offers ₹2 lakh life cover at ₹436 per year for ages 18–50. Pradhan Mantri Suraksha Bima Yojana offers ₹2 lakh accident cover at ₹20 per year for ages 18–70.
Financial inclusion
Key measures are PMJDY (2014), Basic Savings Bank Deposit Accounts, RuPay cards, Direct Benefit Transfer, Aadhaar-enabled payments, business correspondents and business facilitators, MUDRA, Stand Up India and SHG-bank linkage. The RBI publishes a Financial Inclusion Index.
Worked example
A PMJDY account holder aged 30 operates the account satisfactorily for six months. The bank may sanction an overdraft of up to ₹10,000 after assessing the account. The facility is not automatic, and an older person above 50 cannot enrol in PMJJBY, though PMSBY is available up to age 70.
Traps
PMJJBY and PMSBY differ in age limits and premiums. Insurance is not a bank deposit and is not protected by DICGC. Bancassurance is distribution, not underwriting. BSBDA accounts have transaction and balance limits until upgraded.