RSBY to be launched by the Health Ministry from 1st April

• Starting April 1, the Rashtriya Swasthya Bima Yojana (RSBY) of the Labour and Employment Ministry will now be implemented by the Ministry of Health and Family Welfare.

• This was launched by the Ministry of Labour and Employment, Government of India to provide health insurance coverage for Below Poverty Line (BPL) families.

• Objective: To provide protection to BPL households from financial liabilities arising out of health shocks that involve hospitalization.

• Beneficiaries: entitled to hospitalization coverage up to Rs. 30,000/- for most of the diseases that require hospitalization. Beneficiaries need to pay Rs. 30/- as registration fee while Central and State Government pays the premium to the insurer selected by the State Government on the basis of a competitive bidding.

• GOI has fixed the package rates for the hospitals for a large number of interventions.

• Pre-existing conditions are covered from day one and there is no age limit.

• Coverage Extension-upto 5 members of the family which includes the head of household, spouse and up to three dependents.

Difference with other Schemes

1. The Scheme has won plaudits from the World Bank, the UN and the ILO as one of the world’s best health insurance schemes.
2. Empowering the beneficiary - RSBY provides the participating BPL household with freedom of choice between public and private hospitals and makes him a potential client worth attracting on account of the significant revenues that hospitals stand to earn through the scheme.
3. Business model for stakeholder - The scheme has been designed as a business model for a social sector scheme with incentives built for each stakeholder.
4. Hospitals - A hospital has the incentive to provide treatment to large number of beneficiaries as it is paid per beneficiary treated.
5. Intermediaries - The inclusion of intermediaries such as NGOs and MFIs which have a greater stake in assisting BPL households.
6. Information technology Intensive - For the first time IT applications are being used for social sector scheme on such a large scale. Every beneficiary family is issued a biometric enabled smart card containing their fingerprints and photographs. All the hospitals empanelled under RSBY are IT enabled and connected to the server at the district level. This will ensure a smooth data flow regarding service utilization periodically.
7. Safe and Foolproof - The use of biometric enabled smart card and a key management system makes this scheme safe and foolproof. The key management system of RSBY ensures that the card reaches the correct beneficiary and there remains accountability in terms of issuance of the smart card and its usage. The biometric enabled smart card ensures that only the real beneficiary can use the smart card.
8. Portability - The key feature of RSBY is that a beneficiary who has been enrolled in a particular district will be able to use his/ her smart card in any RSBY empanelled hospital across India. This makes the scheme truly unique and beneficial to the poor families that migrate from one place to the other. Cards can also be split for migrant workers to carry a share of the coverage with them separately.
9. Cash and Paperless transaction - A beneficiary of RSBY gets cashless benefit in any of the empanelled hospitals. He/ she only needs to carry his/ her smart card and provide

Source: the Hindu

Q: Write a critical note of the implementation of the RSBY,covering its objectives, demands and implementation [200 words]
Rashtriya Swasthya Bima Yojana (RSBY) was launched by Ministry of Labour and Employment, Government of India in 2008 to provide health insurance cover to Below Poverty Line population and informal sector workers of India.

Aims: Its objective is to protect these families from shocks related to catastrophic expenditures on health by improving access to health and reducing out of pocket expenditure.

Design: This is a Smart Card based cashless and paperless social health insurance scheme.
The scheme has been designed as a business model for a social sector scheme with incentives built for each stakeholder. This business model design is conducive both in terms of expansion of the scheme as well as for its long run sustainability.

It provides annual hospitalization cover up to Rs. 30,000 for a family of five members through health insurance companies. Families pay only a registration fee of Rs. 30 and get a RSBY smart card which helps in accessing empaneled hospitals across the country for in-patient treatment.

Transportation expenses up to Rs. 1,000 per year are provided in cash for travelling to the hospital.
All pre-existing diseases are covered from day one. There is no age limit to enroll in the scheme.
75 % of the cost (premium) of the scheme is borne by Central Government (90% in case of Jammu & Kashmir and North-Eastern States) and the rest is borne out by respective State government.

There have been some problems with its design and implementation.

• The poor in the more remote blocks and villages may be ignored for easier to reach potential enrollees as the premier paid for all are the same. 

• More publicity to inform the beneficiaries regarding the enrolments and benefits of the scheme.

• Empanelled hospitals tend to be placed near district headquarters, raising costs of access for the poor beyond that covered in the programme and packages do not recognise treatment and care uncertainties that incentivise hospitals to treat simpler and less complicated diseases. 

• Additionally, a lack of adequate planning for change in insurance providers creates breaks in service that are avoidable.

• In case if the smart cards are lost/damaged then the issuing of new cards process have to be faster, also claims and settlement process has to be fast.

[Indian Economy] RBI prepares Roadmap for 20 years for Financial Inlcusion

What is Financial Inclusion

• Defination: Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost (according to the Committee on Financial Inclusion).

• The Government of India and the Reserve Bank of India have been making concerted efforts to promote financial inclusion as one of the important national objectives of the country. Some of the major efforts made in the last five decades include - nationalization of banks, building up of robust branch network of scheduled commercial banks, co-operatives and regional rural banks, introduction of mandated priority sector lending targets, lead bank scheme, formation of self-help groups, permitting BCs/BFs to be appointed by banks to provide door step delivery of banking services, zero balance BSBD accounts, etc. The fundamental objective of all these initiatives is to reach the large sections of the hitherto financially excluded Indian population.

• The essence of financial inclusion is to ensure delivery of financial services which include - bank accounts for savings and transactional purposes, low cost credit for productive, personal and other purposes, financial advisory services, insurance facilities (life and non-life)

The extent of Financial Inclusion/Sources of Financial Inclusion:

Financial Inclusion is based on the study from the five different sources like..

1. NSSO 59th Round Survey Results
2. Government of India Population Census 2011,
3. CRISIL-Inclusix
4. RBI Working Paper Series Study on ‘Financial Inclusion in India: A Case-study of West Bengal’
5. World Bank ‘Financial Access Survey’ Results

Results : NSSO

• 51.4% of farmer households are financially excluded from both formal/ informal sources.
• Of the total farmer households, only 27% access formal sources of credit; one third of this group also borrowed from non-formal sources.
• Overall, 73% of farmer households have no access to formal sources of credit.
• Across regions, financial exclusion is more acute in Central, Eastern and North-Eastern regions. All three regions together accounted for 64% of all financially excluded farmer households in the country. Overall indebtedness to formal sources of finance of these three regions accounted for only 19.66%.
• However, over the period of five decades, there has been overall improvement in access to formal sources4 of credit by the rural households

Financial Inclusion: RBI Policy Initiatives

1. Advised all banks to open Basic Saving Bank Deposit (BSBD) accounts with minimum common facilities [no minimum balance, deposit and withdrawal of cash at bank branch and ATMs, receipt/ credit of money through electronic payment channels, facility of providing ATM card.]
2. Relaxed and simplified KYC norms to facilitate easy opening of bank accounts,
3. Simplified Branch Authorization Policy, to address the issue of uneven spread bank branches,
4. Compulsory Requirement of Opening Branches in Un-banked Villages, banks are directed to allocate at least 25% of the total number of branches
5. Opening of intermediate brick and mortar structure, for effective cash management, documentation, redressal of customer grievances and close supervision of BC operations
6. Public and private sector banks had been advised to submit board approved three year Financial Inclusion Plan (FIP) starting from April 2010.
7. Banks have been advised that their FIPs should be disaggregated and percolated down up to the branch level. This would ensure the involvement of all stakeholders in the financial inclusion efforts.
8. Revised guidelines on Financial Literacy Centres (FLCs), through conduct of outdoor Financial Literacy Camps at least once a month,
9. Banks have been advised to issue KCCs to small farmers for meeting their credit requirements
10. The total number of ATMs in rural India witnessed a CAGR of 30.6% during March 2010 to March 2013.
11. MSME sector which has large employment potential of 59.7 million persons over 26.1 million enterprises, is considered as an engine for economic growth and promoting financial inclusion in rural areas.
12. SHG-- This model helps in bringing more people under sustainable development in a cost effective manner within a short span of time.

In the NEWS: Prime Minister Narendra Modi on Thursday asked the Reserve Bank to prepare a 20-year road map for financial inclusion and nudged banks to be considerate in giving loans to the poor as also while making recoveries from them, especially farmers. RBI will be completing 100 years in 2035...it will be appropriate for the central bank to work on the theme of financial inclusion and prepare a road map for achieving it,

The other milestones for achieving financial inclusion could be 150th birth anniversary of Mahatma Gandhi in 2019, 75th year of Independence in 2022, 90th anniversary of RBI in 2025 and 100 years of RBI in 2035, the Prime Minister said. The Prime Minister also called upon the bankers to extend credit to resource rich eastern states.
Source: The Hindu