Government Schemes (Yojana) in India Part:-18
How MCLR is calculated?
What are other components of MCLR?
Swavlamban Health Insurance Scheme All You Need To Know
Introduction
Swavlamban Health Insurance Scheme was launched on October 2, 2016, exclusively for People with Disabilities
(PwD).
Implementing Agencies
Objectives of Swavlamban
Features of PMFBY
Claim and Redressal
Advantage of Swavlamban
Way Forward
Thank You
MCLR : Marginal Cost of Funds Based Lending Rate- Explained
Introduction
- RBI recently made its move from the historic Benchmark Prime Lending Rate (BPLR) to Marginal Cost of Fund
- Based Lending Rate (MCLR) in April 2016 as the current rate setting method for lending money by commercial banks
Need for MCLR
- RBI changes the repo rates and other rates periodically but the banks are slow in changing their interest rates as per RBI rates
- Most commercial banks do not change their lending rates to customers. Ultimately, customers do not receive the benefits aimed by RBI
- Till now, RBI was verbally instructing the commercial banks to change their lending rates with every Repo rate changes
- The real benefit of repo rate changes will be realised only when the customer gets benefited
- With the New MCLR, there will be quick change in the lending rate and the commercial banks will have to oblige with RBI at a fast pace as repo rate is included in MCLR calculation
How MCLR is calculated?
- RBI has instructed all the commercial banks to calculate their marginal cost
- Commercial banks now must include the marginal cost components along with the repo rate to arrive at the MCLR lending rate
- Novel feature of MCLR is the inclusion of repo rate along with marginal cost
What are the Marginal cost components?
- Marginal cost weightage in MCLR – 92 %, return on net worth – 8%
RBI has included the following main components in marginal cost
- Return on net worth (capital adequacy norms)
- Repo rate (short term borrowing rate) and long term borrowing rate
- Interest rate given by banks to various deposits including
- Term deposit
- Current deposit
- Foreign currency deposit
- Savings deposit
What are other components of MCLR?
- CRR negative carry charged on customers
- RBI does not pay any interest to banks for CRR maintained by them and hence banks charge interest to customers for this idle money in RBI
- Exclusion of factor minimum rate of return under MCLR
- Tenor premium of charging higher interest rates on long-term loans
- Overall, MCLR is mainly determined by the marginal cost and the deposit rate
Benefits of MCLR
- MCLR revised on monthly basis benefiting bank customers especially borrowers
- Banks to compete with commercial paper market
- Reduces borrowing cost for companies
- Indian banking industry moves towards international level standards
Pitfalls
- Banks will be reluctant to change to MCLR rule due to cut in interest rates as currently, it is up to the customer to exercise their loans under MCLR as an option
- MCLR rule exempted for loans given to retired employees, existing employees, government schemes etc
Conclusion
- Bank customers will quickly get the benefits of the repo rate changes from their respective banks
- Banks also get benefited to compete with commercial paper market
- MCLR has to be implemented by RBI with a strong monitoring system to check whether banks change their lending rates according to the repo rate cuts
- Companies and borrowers will get benefited with the low-interest rates for short term loans and reflection on repo on lending rates
- The ultimate success of MCLR lies in the end user getting benefitedLending rates will see quick change in MCLR
- The entire economy of India will get a boost with increment in rate transparency as a result of MCLR - A change in repo by RBI reflects on the loans borrowed by individuals from banks
- Overall, this MCLR regime is one of the innovative measures of RBI to improve Indian banking system to global standards
Swavlamban Health Insurance Scheme All You Need To Know
Swavlamban Health Insurance Scheme was launched on October 2, 2016, exclusively for People with Disabilities
(PwD).
- New India Assurance Company NIACL is the implementing agency
- Department of Empowerment of Persons with Disabilities under ministry of social justice is the monitoring agency
- Ministry of Social Justice is the ministry concerned with Swavlamban Scheme
Objectives of Swavlamban
- To give low cost and affordable health insurance to PwD (includes people with low vision, mental illness, leprosy,Blind, hearing impairment, mental retardation, loco-motor disability)
- To improve quality of life of the PwD
- To improve PwD condition of general health
Features of PMFBY
- Uniform premium of 357 rupees (which is 10% of the actual premium + Service Tax) per PwD person throughout the country
- Sum insured is 2 lacs for a year
- Swavlamban will cover PwD in the age group of 0 to 65 years
- PwD must carry the PwD certificate issued by PwD Act, 1995 to get enrolled
- In case of minor PwD, parents of PwD are also covered
- PwD family including spouse and up to two children are covered by the scheme
- PwD with family income not exceeding 3 lacs p.a are eligible
- There are no premedical tests involved before enrolling into the policy
- OPD benefits include 10000 p.a per PwD and 3000 p.a for mentally retarded people
Claim and Redressal
- New India Assurance NIACL in the nodal agency for Swavlamban
- New India Assurance has created a network of hospitals for the beneficiaries of Swavlamban to get free treatment under the policy
- PwD getting treatment outside the network must get the consent and approval of New India Assurance NIACL
- However, in case of emergency, PwD insured can be admitted in another hospital outside the network without prior approval
- Claims must be made to New India Assurance with available PwD certificate
- Grievances must be lodged to New India Insurance authorised person for resolution
- Grievances are monitored by a Dispute resolution committee consisting of representatives from the Department of Empowerment of PwD and New India Assurance
Advantage of Swavlamban
- Cashless treatment for PwD in the designated hospital networks identified by New India Assurance
- Free OPD treatment up to 10000 rupees also included in the health insurance scheme
- Family of PwD is also covered which is an additional benefit of the scheme
- Swavlamban helps people with PwD to be recognised in the society and live with self-esteem
- Redressal mechanism is efficient until the PwD concerned is satisfied
- Treatment is offered to PwD for preexisting medical problems also
- Claim settlement is done in a transparent manner
- Enrollment procedure made simple through the New India Assurance network
Limitations of Swavlamban
- Swavlamban excludes people with
Autism
Cerebral palsy and
Multiple disabilities
Cerebral palsy and
Multiple disabilities
- Swavlamban emergency procedures and provisions must be enhanced further
- Awareness about this scheme is limited among PwD
Way Forward
- Swavlamban is a sign of progress for the welfare of PwD
- Awareness about this scheme must be enhanced and more PwD must be enrolled in the scheme
- Government of India has introduced a slew of welfare measures for PwD in this fiscal year including Swavlamban but the implementation and monitoring must be enhanced further
- Initial steps to be taken to cover all PwD’s working in the formal sector
- Identification of beneficiaries is a key challenge
- Overall, this scheme is a positive measure in utilising the PwD talent and recognising them as respectable individuals in the society
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