The Indian Prime Minister Narendra Modi has launched a new scheme, Pradhan Mantri Jan Dhan Yojana (PMJDY), with an objective to provide every household in the country with a bank account.

The scheme, announced by Modi on 15 August during his maiden Independence Day address, is part of the government’s broad financial inclusion plan.

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Nearly 10 million bank accounts are expected to be opened in India by public sector banks on the first day of the scheme, which is expected to save billions of dollars in welfare spending.

In a mail sent to all bank officers earlier this week, the Prime Minister said, "We need to enroll over 7 crore households and open their accounts. This is a national priority and we must rise to meet this challenge.

"There is an urgency to this exercise as all other development activities are hindered by this single disability. I am sure we will overcome this situation collectively."

Under the first of the scheme that would last until August 2015, every account holder will be offered a ‘RuPay’ debit card with inbuilt accident insurance coverage of worth INR1lakh ($1651).

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Under the second phase, which will start from 2015 and run until 2018, the government aims to offer two accounts each to 75 million households.

The finance ministry said in a statement: "About 76 mega functions will also be organized at prominent places throughout the country to mark the launch of scheme which will be attended by the union ministers and the state chief ministers along with other dignitaries.

"It is estimated that about one crore (10 million) accounts will be opened on this day."

Additionally, the scheme will give an overdraft facility of INR5,000 ($82.7) for all Aadhaar-enabled accounts that have satisfactorily operated for six months.