NEW DELHI: Prime Minister Narendra Modi on Thursday launched the 'Pradhan Mantri Jan Dhan Yojana', his pet financial inclusion project that aims at ensuring a bank account for every household.

Finance Minister Arun Jaitley said, "Prime Minister Narendra Modi has asked us to ensure that 7.5 crore bank accounts are set up till January 26, 2015.""Around 10 crore people are not covered by the banking system. Many people in rural areas have no access to bank loans," Jaitley said. "Government wants to ensure that no one is left out of the banking system," he added.

Speaking on the occasion Commerce Minister Jan Dhan Yojana Nirmala Sitharaman said, "Jan Dhan Yojana will ensure basic savings account and will cover each and every household.""The scheme will provide overdraft, debt card facility," she said. "Jan Dhan Yojana will provide accidental insurance cover," she added.

The finance ministry has set an ambitious target of opening 1.5 crore bank accounts on the first day. The Jan Dhan Yojana aims to cover 60% of the country's population that does not have access to formal banking services. Under the scheme, every household will be provided one bank account within a year.

The massive financial inclusion project will give unbanked customers RuPay debit card, launched by the National Payments Corporation of India (NPCI), along with free insurance cover and new bank account.

NPCI had entered into a three-year agreement with private general insurance HDFC Ergoand a similar agreement will be signed with LIC.

RuPay cardholders will have dual insurance covers, with the government roping in the Life Insurance Corporation of India. LIC, the country's largest financial institution, will offer a life cover of Rs 30,000 while HDFC Ergo will provide a Rs 1-lakh personal accident cover to RuPay cardholders.

Senior officials said the government had decided to improvise the scheme by providing additional insurance cover. The government approached LIC after first picking the state-owned general insurance company New India Assurance for providing additional cover of Rs 1 lakh.

LIC will provide unconditional cover to RuPay cardholders. HDFC Ergo will provide cover to the cardholders in case of death or permanent disability. As per the agreement between HDFC Ergo and NPCI, a claim will be disposed only if the card is active. A card will be considered active if the cardholder has swiped it within 45 days of making a claim. The NPCI is in talks with HDFC Ergo to improvise the scheme so that the claim can be made if the card was swiped within the preceding 90 days.

The NPCI has issued 23 million cards, and it is estimated that 150 million new bank accounts will be opened and as many new cards will be issued in the unbanked areas by March 2016, with the NPCI paying the premium instead of the cardholder.