The year 2024 marks the tenth year of Pradhan Mantri Jan-Dhan Yojana (PMJDY). PMJDY was launched ten years ago on August 28, 2014.
The government aims to open more than 3 crore accounts under PMJDY during the current financial year 2024-25.
Achievements of Pradhan Mantri Jan-Dhan Yojana:
Account Expansion:
PMJDY had opened 147 million accounts in March 2015, which has reached 520 million accounts in March 2024.
Deposit collection:
Deposit collection increased from Rs.15,600 crore in March 2015 to Rs. 2.32 trillion in March 2024.
Deposit collection has grown at a compounded average growth rate of 30% in the last 10 years.
Average balance increased from Rs 1,065 in March 2015 to Rs 4,476 in March 2024, almost four times in the last decade.
Expansion of Banking Infrastructure:
More than 1.3 million banking touch points have been mapped on Jan Dhan Darshak (JDD) App.
A total of 6,01,000 villages have been mapped on JDD App till July 2023. Out of these total mapped villages, 5,99,468 (99.7%) villages have banking outlets (bank branch, banking corner, or India Post Payments Bank within 5 km radius).
Jan Dhan Darshak App is a mobile application, which helps citizens to locate banking touchpoints like branches, ATMs, Banking Correspondent (BC) IPPB etc.
Rural and Urban Equality:
According to the Ministry of Finance, PMJDY achieved a total of 53.13 crore PMJDY accounts, out of which 55.6% (29.56 crore) Jan Dhan account holders are women and 66.6% (35.37 crore) Jan Dhan accounts are in rural and semi-urban areas.
The rise of digital payments:
The total number of UPI financial transactions has increased from 920 million in FY18 to 131.2 billion in FY 2024.
Similarly, the total number of RuPay card transactions at Point of Sale (PoS) and e-commerce has increased from 670 million in FY18 to 1.26 billion in FY2023.
Direct Benefit Transfer (DBT):
PMJDY has directly transferred about US $361 billion to beneficiaries from 53 Central Government Ministries through 312 flagship schemes.
During COVID-19, PMJDY accounts under Pradhan Mantri Garib Kalyan Yojana (PMGKY) played an important role in providing one-time ex-gratia payment of Rs 500 per month for three months (April, May and June 2020), benefitting 206.4 million women account holders.
Overdraft (OD) accounts:
A total of 1,17,701 overdraft facility accounts with sanctioned amount of Rs 190 crore have been opened for such PMJDY account holders till March 2024. The use of this limit is 80.5%.
It has ensured access to credit from the formal financial system for the poorest.
Accounts with low zero balance:
Although accounts with zero balance are allowed under PMJDY and it is not mandatory to maintain a minimum balance, still only 8.4% accounts have zero balance.
Praise by World Bank:
According to the World Bank, India has achieved so much in six years that it could not have done in five decades.
The Jan Dhan-Aadhaar-Mobile (JAM) trinity has increased the financial inclusion rate from 25% in 2008 to 80% of adults, a progress that will take 47 years to complete, thanks to digital public infrastructure (DPI).
PMJDY:
PMJDY is a financial inclusion programme aimed at ensuring access to financial services such as basic savings and deposit accounts, remittances, loans, insurance, pensions in an affordable manner.
Under this scheme, individuals who do not have any other account can open a Basic Savings Bank Deposit (BSBD) account at any bank branch or Business Correspondent (Bank Mitra) outlet.
Features:
There is no minimum balance:
No minimum balance is required to be maintained in PMJDY accounts.
A free debit card:
PMJDY account holders are provided with a free RuPay debit card.
Accident insurance cover:
Rs 1 lakh (extended to Rs 2 lakh for new PMJDY accounts opened since 2018) is available with RuPay card issued to PMJDY account holders.
OD feature:
Overdraft (OD) facility of up to Rs 10,000 is available to eligible account holders.
DBT Benefits:
PMJDY accounts are eligible for DBT, Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) Pradhan Mantri Suraksha Bima Yojana (PMSBY) Atal Pension Yojana (APY) Micro Units Development and Refinance Agency Bank (MUDRA) scheme.
However, there is no mandatory free cheque book facility with the PMJDY account. Banks can issue cheque books on PMJDY accounts, which may or may not have a value.
Challenges associated with PMJDY:
More than one account:
In the greed of getting bigger insurance cover, accidental death benefit cover and overdraft facility, people open multiple accounts in different banks using different identity documents like Aadhaar card, PAN card etc.
Financial burdens on banks:
Many accounts with persistently low balances pose financial problems for banks in managing them.
Money laundering:
There are concerns that Jan Dhan accounts of the poor are used by black money operators to launder money.
Jan Dhan accounts were used to launder money after demonetisation.
Reduction in overdraft facility:
Providing OD facility is the discretion of the respective banks. Many banks refuse to provide OD facility, which does not serve the purpose.
Abuse of the right:
Sometimes Business Correspondents (BC) abuse authority and make the lives of people living below the poverty line miserable.
BCs can charge extra for services that are considered free or low-cost, such as opening bank accounts, processing transactions or providing loans.
Bad Loans:
It is likely that the overdraft facility may end up as a bad loan for banks, as the scheme does not specify how banks can recover loans.
Due to many loan waiver schemes in the past, people have started considering loans as a free commodity.
Financial and technical illiteracy:
Rural people lack awareness, knowledge and skills to make decisions about saving, borrowing, investing and spending.
A survey conducted by financial services giant Visa has revealed that 65% of Indians lack financial literacy.
Solution:
The centralized authentication system:
Implementing a centralized system to prevent duplication of accounts using biometric and digital identity verification.
Encouraging individuals to have a single account instead of multiple accounts, such as increased benefits or lower fees.
National Strategy for Financial Inclusion (NSFI):
The upcoming NFSI for the year 2025-30 should focus on PMJDY to increase the reach and awareness of the social security scheme among the target population.
Insurance for all:
India needs to move away from focusing only on accounts and balances.
Efforts need to be made to ensure coverage under micro insurance schemes to PMJDY account holders.
There is a need to improve access of PMJDY account holders to micro-investments such as micro-credit and flexi-recurring deposits.
Enhanced reach of OD accounts:
The reach of OD accounts should be improved so that PMJDY becomes a catalyst for a good phase of growth and contributes towards a developed India.
New focus areas:
The Centre believes that PMJDY has covered most of the adult population. Now our focus is to cover the entire adult population and those who have attained adulthood.
