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General Awareness 3% exam weight

Government Banking Schemes

Part of the IBPS Clerk study roadmap. General Awareness topic genera-005 of General Awareness.

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Government Banking Schemes

India’s government has launched numerous banking and financial inclusion schemes to extend the reach of formal banking to the unbanked, provide credit to underserved sectors, and promote digital payments. For IBPS Clerk candidates, these government schemes are a critical part of the General Awareness syllabus because they frequently appear in examinations and also reflect the broader policy environment in which bank clerks operate. Understanding these schemes also helps clerks explain banking products to customers and direct them to appropriate government benefits. This chapter covers the major government banking and financial inclusion schemes relevant to the IBPS Clerk examination.

Priority Sector Lending and Government Banks

Before discussing specific schemes, it is important to understand the context in which these schemes operate. The Priority Sector Lending (PSL) requirements mandate that banks allocate a portion of their lending to defined priority sectors. These PSL targets are specified by the RBI and include agriculture, micro and small enterprises, education, housing, and weaker sections. Government schemes often leverage the PSL framework to channel credit to target populations.

Major Government Banking and Financial Schemes

1. Pradhan Mantri MUDRA Yojana (PMMY)

Launched on April 8, 2015, by Prime Minister Narendra Modi, the Pradhan Mantri MUDRA Yojana (PMMY) provides loans to non-corporate, non-farm small and micro enterprises. MUDRA stands for Micro Units Development and Refinance Agency.

Target group: Individuals, SHGs (Self-Help Groups), JLG (Joint Liability Groups), proprietorship firms, partnership firms, manufacturing, service, and trading enterprises with annual turnover less than ₹10 lakh.

Key features:

  • Loans are provided by banks, MFIs (Micro Finance Institutions), and NBFCs (Non-Banking Financial Companies)
  • No collateral required for loans up to ₹10 lakh
  • Loans are categorized as Shishu, Kishore, and Tarun:
    • Shishu: Loans up to ₹50,000
    • Kishore: Loans from ₹50,000 to ₹5 lakh
    • Tarun: Loans from ₹5 lakh to ₹10 lakh
  • Loans do not carry any interest subsidy from the government but are extended at market rates by banks; the MUDRA guarantee covers default risk
  • The MUDRA Card (a RuPay debit card) allows borrowers to withdraw working capital from ATMs

2. Pradhan Mantri SVANidhi (PM Street Vendor’s AtmaNirbhar Nidhi)

Launched in June 2020 as a COVID-19 relief measure, PM SVANidhi provides micro-credit to street vendors who were engaged in vending before the lockdown (April 1, 2020).

Key features:

  • Loan amount: Up to ₹50,000 (without collateral)
  • Interest subsidy: Government pays interest for the first year (no interest from vendor)
  • Enhanced credit: On repayment, vendors can get a second loan of up to ₹20,000 and a third loan of up to ₹50,000
  • Digital transaction incentive: Vendors receive a monthly cashback on digital transactions made using the PM SVANidhi card/app

3. Stand Up India Scheme

Launched on April 5, 2016, the Stand Up India scheme facilitates bank loans between ₹10 lakh and ₹1 crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise in the manufacturing, services, or trading sector.

Key features:

  • Available at all scheduled commercial banks
  • The enterprise must be a greenfield project (new business — not an existing unit)
  • At least 51% of the shareholding and management must be held by an SC/ST and/or woman entrepreneur
  • The loan is a composite loan (term loan and working capital)

4. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Launched on May 9, 2015, PMJJBY is a one-year life insurance scheme renewable from year to year offering coverage for death due to any reason.

Key features:

  • Premium: ₹436 per year (auto-debited from bank account)
  • Coverage: ₹2 lakh on death from any cause
  • Eligibility: Bank account holders aged 18–50 years with at least one bank account
  • Enrollment: One-time enrollment through CBSA (Common Branch Service Area) form; auto-renewed unless cancelled
  • Claim: Death certificate and claim form submitted to bank

5. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Launched on May 9, 2015, PMSBY is a one-year accidental death and disability insurance scheme.

Key features:

  • Premium: ₹20 per year (auto-debited from bank account)
  • Coverage:
    • ₹2 lakh for accidental death or total permanent disability
    • ₹1 lakh for partial permanent disability (loss of one limb or one eye)
  • Eligibility: Bank account holders aged 18–70 years
  • Enrollment: One-time enrollment; auto-renewed

6. Atal Pension Yojana (APY)

Launched on May 9, 2015, APY is a government-subsidized pension scheme for workers in the unorganized sector (except those covered under any statutory social security scheme).

Key features:

  • Eligibility: All citizens aged 18–40 years who are not covered under any statutory pension scheme
  • Contribution: Based on age of entry and desired pension amount (₹1,000–₹5,000 per month)
  • Government co-contribution: The government contributes 50% of the subscriber’s contribution (up to ₹2,000 per year) for those with income below ₹10,000 per month under the撒axonomy
  • Spouse’s continuation: If the subscriber dies, the spouse continues to receive the pension; after both die, the accumulated pension corpus is returned
  • Returns: Guaranteed minimum pension based on contribution and age

7. Pradhan Mantri Awas Yojana (PMAY)

Launched on June 25, 2015, PMAY aims to provide “Housing for All by 2022” (the 75th year of India’s independence).

PMAY has two tracks:

  • PMAY-Urban: For urban areas; credit-linked subsidy (CLSS) on home loans for economically weaker section (EWS), low-income group (LIG), and middle-income group (MIG):
    • EWS/LIG: 6.5% interest subsidy on loan amount up to ₹6 lakh
    • MIG I: 4% interest subsidy on loan up to ₹9 lakh
    • MIG II: 3% interest subsidy on loan up to ₹12 lakh
  • PMAY-Gramin: For rural areas; construction of pucca houses with financial assistance from the government

PMAY-CLSS (Credit Linked Subsidy Scheme) is particularly relevant for bank clerks — eligible customers can get their home loan interest subsidized, reducing their EMI burden. Banks process PMAY subsidy claims through the CLSS portal.

8. Kisan Credit Card (KCC)

The Kisan Credit Card scheme, launched in 1998, provides farmers with affordable credit for their agricultural and allied activities.

Key features:

  • Who can apply: Individual farmers (joint liability groups of farmers also eligible) who are engaged in agriculture or allied activities
  • Credit limit: Based on landholding, cropping pattern, and farm productivity; covers production credit, investment credit, and consumption needs
  • Interest rate: Subvented rate (currently around 4% per annum for short-term crop loans up to ₹3 lakh, subject to prompt repayment)
  • Collateral-free credit: Up to ₹1.60 lakh without collateral
  • ATM/RuPay card: KCC holders receive a RuPay KCC card for withdrawing cash and making purchases
  • Flexible repayment: Based on harvesting cycle

The KCC was expanded in 2019 to cover fishermen and animal husbandry farmers (dairy, poultry, etc.) in addition to crop farmers.

9. Gold Monetization Scheme (GMS)

Launched in 2015, the Gold Monetization Scheme allows individuals to deposit their idle gold holdings in banks (designated collection centers) for a specified period, earning interest on the deposited gold. The gold is then refinanced to the jewelery industry or used for other purposes.

Variants:

  • Short-term Bank Deposit (STBD): Minimum 1 gram, tenure 1–3 years, tax-free interest in the form of gold
  • Medium and Long-Term Government Deposit (MLTGD): Tenure 5–7 years; conversion into sovereign gold bonds

Related: Sovereign Gold Bond (SGB): Instead of physical gold, investors can buy government securities denominated in grams of gold. The bonds pay interest (2.5% per annum) and the investor gets the market value of gold at maturity. SGBs are a cleaner way to invest in gold without physical possession.

10. Sukanya Samriddhi Yojana (SSY)

Launched on January 22, 2015, SSY is a savings scheme for the girl child that provides tax benefits and a guaranteed return.

Key features:

  • Who can open: Guardian of a girl child below 10 years of age
  • Maximum deposits: Up to ₹1.50 lakh per year
  • Interest rate: Currently 8.2% per annum (revised quarterly)
  • Tenure: Until the girl turns 21 years old (or upon marriage after 18 years)
  • Partial withdrawal: For education purposes after the girl turns 18
  • Tax benefits: Contributions qualify for deduction under Section 80C; interest and maturity amounts are tax-free (EEE status — exempt, exempt, exempt)

⚡ Exam tip: MUDRA loans are categorized as Shishu (up to ₹50,000), Kishore (₹50,000–₹5 lakh), and Tarun (₹5 lakh–₹10 lakh). PMJJBY costs ₹436/year for ₹2 lakh life cover. PMSBY costs ₹20/year. APY is for unorganized sector workers aged 18–40. SSY is for the girl child (EEE tax status — exempt on contribution, interest, and maturity). KCC is for farmers and now also covers fishermen and animal husbandry. PMAY provides interest subsidy on home loans (6.5% for EWS/LIG on ₹6 lakh loan).

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