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India urges millions of poor to open bank accounts

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Photo - Indians gather around a table inside a state-owned bank to open their accounts as part of a massive countrywide campaign to open millions of accounts for the poor in New Delhi, India, Thursday, Aug. 28, 2014.The measure is aimed at some 150 million Indians who are off the financial grid and vulnerable to black market money lenders. As an incentive the federal government is providing 100,000 rupees ($1,650) in life insurance to every account holder. (AP Photo /Manish Swarup)
Indians gather around a table inside a state-owned bank to open their accounts as part of a massive countrywide campaign to open millions of accounts for the poor in New Delhi, India, Thursday, Aug. 28, 2014.The measure is aimed at some 150 million Indians who are off the financial grid and vulnerable to black market money lenders. As an incentive the federal government is providing 100,000 rupees ($1,650) in life insurance to every account holder. (AP Photo /Manish Swarup)
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NEW DELHI (AP) — India's state-owned banks are conducting a massive campaign to open millions of accounts for poor Indians who are off the financial grid and vulnerable to black market money lenders.

Prime Minister Narendra Modi officially launched the program on Thursday, saying it would give the poor "renewed strength to fight poverty."

"When a bank account is opened, it's a step towards joining the economic mainstream," said Modi, who swept to power in May after an election campaign that promised an end to corruption, a revival in economic growth and a fairer society.

The program may eventually help sideline extortionate money lenders or unscrupulous banks, some of which are blamed for driving tens of thousands of impoverished farmers to suicide each year over debts amounting to just a few thousand dollars.

Tens of thousands of people have applied to open accounts since Aug. 15, when Modi announced the campaign in his Independence Day speech to the nation, bank managers said.

Modi had urged banks in a recent letter to "try your best to ensure that no one is left without a bank account." The goal is to sign up 150 million people by 2018. About half of India's 1.2 billion people lack bank accounts.

"There is an urgency to this exercise, as all other development activities are hindered by this single disability," Modi's letter said, according to his web site.

The four-year program may also help beat back the endemic corruption affecting almost every level of Indian bureaucracy, by channeling government welfare and work payments directly into the accounts of individuals rather than through regional and local offices.

"Any help the government provides will be deposited ... that is why I opened this account," said Ramesh Singh, a 27-year-old chauffeur, as he lined up to submit his paperwork at a bank branch in the southern suburbs of New Delhi.

The accounts are unique in that they would stay open without penalty if empty, a key condition for keeping enrolled the hundreds of millions of impoverished Indians earning about a dollar a day or less.

As an incentive, the federal government is providing 100,000 rupees ($1,650) in life insurance to every account holder.

Dozens of state banks with more than 100,000 branches countrywide are participating.

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