The Hindu Editorial Weekly Vocab 19-24 JULY 2021

🔰Atal Pension Yojana🔰
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Atal Pension Yojana (APY, translation: Atal's Pension Scheme), formerly known as Swavalamban Yojana is a government-backed pension scheme in India, primarily targeted at the unorganised sector. It was mentioned in the 2015 Budget speech by the then Finance Minister Arun Jaitley. It was launched by Prime Minister Narendra Modi on 9 May in Kolkata.

Swavalamban Yojana was a government-backed pension scheme targeted at the unorganised sector in India. It was applicable to all citizens in the unorganised sector who joined the National Pension Scheme (NPS) administered by the Pension Fund Regulatory and Development Authority (PFRDA) Act 2013.

Scheme
In order to incentivize people to enroll in this scheme and widen its reach, the government announced that it would co-contribute 50% of the total contribution or ₹1,000 (US$14) per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years. Only subscribers who had enrolled in APY between 1 June 2015 and 31 March 2016, and were not beneficiaries of any social security schemes, besides not having any taxable income were eligible for this co-contribution.

The minimum eligible age for a person joining APY is 18 years and the maximum is 40 years. An enrolled person would start receiving pension on attaining the age of 60 years. Therefore, a minimum period of contribution by the subscriber under APY would be 20 years or more. The national Aadhaar ID number is the primary "know your customer" document for identification of beneficiaries, spouses, and nominees to avoid entitlement-related disputes in the long-term. For proof of address, an individual may submit a copy of their ration card or bank passbook.

Subscribers are required to opt for a monthly pension from ₹1,000 (US$14) to ₹5,000 (US$70) and ensure payment of the stipulated contribution regularly (monthly, quarterly, or half-yearly basis). Subscribers can opt to decrease or increase pension amount during the course of the accumulation phase, as per the available monthly pension amounts. However, the option to switch is only provided once a year during the month of April.

This scheme will be linked to the bank accounts opened under the Pradhan Mantri Jan Dhan Yojana scheme and the contributions will be deducted automatically.

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🟥Banking Term of the Day: Nostro Accounts🟥

Nostro Account is the account which a bank of a country holds in the bank of another country in the foreign currency and it helps the bank which is having the account in bank of another country by the way of simplifying the exchange and trading process for the foreign currencies.

In simple words, it refers to the foreign bank account established through the domestic bank in the respective country of the currency desired.

🏮Advantages
➖You can pay the money to a third party in your home currency without taking any exchange rate risk.
➖Easy to operate since it is a mere transfer of funds from one account to another in the same bank.
➖Enables to keep funds in foreign currency.
➖Reduces the excessive fluctuation risk in exchange rates since money is directly emitted to the other party without physically been there.


🏮Disadvantages
➖A lesser rate of interest as compared to savings or current account.
➖Generally more expensive since it is a facility provided by the home bank to execute foreign exchange transactions smoothly.
➖Rigorous regulations and laws imposed for the operation of the Nostro account by the federal bank.

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The Hindu Editorial 27.07.2021

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