Bima Vahak Project

Bima Vahak Project

Important for Prelims:

Bima Vahak, Insurance Regulatory and Development Authority of India (IRDAI), Pradhan Mantri Jan Dhan Yojana (PMJDY), Stand-up India, MUDRA Scheme, BBBP Scheme, Sukanya Samriddhi Yojana, National Rural Livelihood Mission, STEP (Women support to training and employment programmes), Rashtriya Mahila Kosh (RMK), Mahila e-Haat.

Important for Mains:

GS-3: Bima Vahak Project, Importance, Gender Based Barriers in Financial Inclusion, Schemes for Financial Inclusion of Women in India.

Nov. 20, 2023

Why in news:

Recently, to ensure access to insurance in rural areas of the country, the Insurance Regulatory and Development Authority of India (IRDAI) has issued important guidelines related to Bima Vahak Project.

  • Bima Vahak is a dedicated women-centric distribution channel in rural areas.
  • This project is part of IRDAI's strategy to achieve the goal of 'Insurance for All'.

Guidelines:

  • A comprehensive insurance product must be delivered by the effective date.
  • Insurance carriers should be deployed in every gram panchayat by 31 December 2024.
  • Role of Bima Vahak:
  • Both individual and corporate insurance carriers will be equipped with handheld electronic communication devices integrated into the electronic platforms of insurers.
  • They will sell and service 'Bima Extension' and other specified insurance products.
  • Insurance carriers are not allowed to collect fees or charges from policyholders, except insurance premiums.
  • Operating Standards: The Life Insurance Council and the General Insurance Council will jointly establish operational and conduct standards for insurance carriers.
  • These standards will cover educational requirements, commission structures, training, terms of appointment, database maintenance, data privacy and compliance.
  • Coverage Extension: Insurers have to conform to the standards set by the councils and have a board approved policy on the insurance carrier.
  • They should involve individual and corporate insurance carriers with a focus on gradually covering each gram panchayat (village administrative unit).
  • Their responsibilities may include assisting with proposal forms, facilitating KYC processes, issuing insurance policies, providing support for policy and claims related services and assisting in claims settlement.

About Bima Vahak Project:

  • Bima Vahak Project is closely linked with the concept of major insurers introduced by IRDAI.
  • This project is one of the components of IRDAI's “Insurance for All by 2047” goal which aims to improve the accessibility and availability of insurance products across India.
  • This project involves corporate and individual representatives. These representatives, known as insurance carriers, will be responsible for distributing and servicing insurance products.

Objective:

  • The project aims to involve women as insurance carriers as they can gain the trust of local people and facilitate insurance penetration in different communities.
  • The insurance carrier aims to increase the reach and awareness of insurance in every region of the country by connecting with the local population.

Significance:

  • This project can significantly contribute to increasing insurance inclusion, increasing awareness and adoption of insurance offerings to meet the diverse needs and aspirations of the people in every Gram Panchayat across India.
  • Women in low-income households often serve as the primary decision-makers for spending and saving.
  • Their commitment and discipline in saving is generally higher than that of men.
  • Research shows that women save when they have the opportunity, thus building financial flexibility.
  • Targeting women benefits banks economically and contributes to social welfare.
  • Women's involvement with financial institutions and their access to work and credit can increase their social capital.
  • Financially empowering 230 million women Jan Dhan customers has the potential to uplift the lives of 920 million people in average-sized households.
  • Providing low-income women with effective and affordable financial tools for saving, borrowing, payments and risk management is critical to women's empowerment and poverty reduction.
  • According to the 2017 Global Findex database, in 2017, 83% of males above 15 years of age in India had accounts with financial institutions, while 77% of females had accounts.
  • Socio-economic factors such as greater availability of mobile handsets and Internet data among men contribute to this gap.

Gender based barriers to financial inclusion

Demand Side Constraints:

  • Lack of bargaining power at home.
  • Decrease in mobility due to time constraints or social norms.
  • Account opening requirements are hurting women.
  • Concentration in low-wage economic activities.
  • Lack of gender-specific policies and practices in product design and marketing.
  • Competing demands on women's time related to unpaid domestic work.

Supply Side Constraints:

  • Improper distribution channels.
  • Legal barriers to ownership and inheritance of property and other collateral.
  • Lack of assets for collateral.
  • Low rates of digital inclusion.
  • Lack of gender-inclusive credit reporting systems.

Legal and Regulatory Barriers:

  • Legal and regulatory barriers related to property ownership and inheritance.
  • Lack of gender-inclusive policies and practices.
  • Challenges in obtaining formal recognition.

Schemes for Financial Inclusion of Women in India:

  • Pradhan Mantri Jan Dhan Yojana (PMJDY): Launched in 2014, the scheme is one of the largest financial inclusion programs globally. It aims to provide universal access to banking facilities with a special focus on women.
  • Stand-Up India: Launched in 2016, this scheme promotes entrepreneurship among women and marginalized communities by providing loans to start greenfield enterprises in manufacturing, trading or service sector.
  • MUDRA Scheme: Under the Micro Units Development and Refinance Agency (MUDRA) scheme, loans are provided to women up to a certain limit to start or expand small businesses in three categories: Shishu (up to Rs 50,000), Kishore (up to Rs 50,000 Rs to Rs 5 lakh), and Tarun (Rs 5 lakh to Rs 10 lakh).
  • Beti Bachao, Beti Padhao (BBBP): This scheme indirectly contributes to financial inclusion and economic empowerment besides educating and empowering girls.
  • Sukanya Samriddhi Yojana: Launched under the “Beti Bachao, Beti Padhao” campaign, it is an insurance scheme that allows parents to save money for the future education and marriage expenses of their girls.
  • Mahila e-Haat: It is an online marketing platform for women entrepreneurs, where they can showcase their products and reach a wider audience. This initiative encourages economic empowerment and financial inclusion of women.
  • National Rural Livelihood Mission (NRLM): NRLM, also known as Aajeevika, aims to organize women into Self-Help Groups (SHGs) and provide them access to micro credit and livelihood opportunities.
  • Stree Shakti Package: This package offered by various banks includes benefits such as lower interest rates on loans, special loan facilities and fee concessions for women entrepreneurs.
  • Rashtriya Mahila Kosh (RMK): RMK provides micro loans to poor women for income-generating activities. It focuses on promoting self-employment and entrepreneurship among women.
  • STEP (Support to Training and Employment Program for Women): This program of the Ministry of Women and Child Development aims to provide skill training and employment opportunities to women, which will increase their financial independence.

IRDAI:

  • IRDAI is a regulatory body established in the year 1999.
  • The main objective of this institution was to protect the interests of insurance customers.
  • Under the Ministry of Finance, this institution is a statutory body under the IRDA Act, 1999.

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Mains Exam Question

What is an Bima Vahak Project? Discuss the various schemes launched for financial inclusion of women in India.