Pradhan Mantri Jan-Dhan Yojana (PMJDY) – National Mission for Financial Inclusion, completes seven years of successful implementation

Ministry of Finance is committed to provide financial inclusiveness and support to the marginalized and hitherto socio-economically neglected classes. Financial Inclusion is a national priority of the Government as it is an enabler for inclusive growth. It is important as it provides an avenue to the poor for bringing their savings into the formal financial system, an avenue to remit money to their families in villages besides taking them out of the clutches of the usurious money lenders. A key initiative towards this commitment is the Pradhan Mantri Jan Dhan Yojna (PMJDY), which is one of the biggest financial inclusion initiatives in the world.

PMJDY was announced by Prime Minister, Narendra Modi in his Independence Day address on 15th August 2014. While launching the programme on 28th August, the Prime Minister had described the occasion as a festival to celebrate the liberation of the poor from a vicious cycle.

On the 7^th Anniversary of PMJDY, Finance Minister Nirmala Sitharaman reiterated the importance of this Scheme “The journey of PMJDY led interventions undertaken over a short span of 7 years has in effect, produced both transformational as well as directional change thereby making the emerging FI ecosystem capable of delivering financial services to the last person of the society-the poorest of the poor. The underlying pillars of PMJDY, namely, Banking the Unbanked, Securing the Unsecured and Funding the Unfunded has made it possible to adopt multi-stakeholders’ collaborative approach while leveraging technology for serving the unserved and underserved areas as well.” she said

Minister of State for Finance, Dr. Bhagwat Karad also expressed his thoughts for PMJDY on this occasion. He said “Pradhan Mantri Jan Dhan Yojana (PMJDY) has been one of the most far reaching initiatives towards Financial Inclusion not only in India but in the world. Financial Inclusion is among top-most priorities of the Government as it is an enabler for inclusive growth. It provides an avenue to the poor for bringing their savings into the formal financial system, an avenue to remit money to their families besides taking them out of the clutches of the usurious money lenders.”

As we complete 7 years of successful implementation of this Scheme, we take a look at the major aspects and achievements of this Scheme so far.

Background

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

1. Objectives:
   • Ensure access of financial products & services at an affordable cost
   • Use of technology to lower cost & widen reach
2. Basic tenets of the scheme
   • Banking the unbanked – Opening of basic savings bank deposit (BSBD) account with minimal paperwork, relaxed KYC, e-KYC, account opening in camp mode, zero balance & zero charges
   • Securing the unsecured – Issuance of Indigenous Debit cards for cash withdrawals & payments at merchant locations, with free accident insurance coverage of Rs. 2 lakh
   • Funding the unfunded – Other financial products like micro-insurance, overdraft for consumption, micro-pension & micro-credit
3. Initial Features

 

The scheme was launched based upon the following 6 pillars:

 

• Universal access to banking services  – Branch and BC
• Basic savings bank accounts with overdraft facility of Rs. 10,000/- to every eligible adult
• Financial Literacy Program– Promoting savings, use of ATMs, getting ready for credit, availing insurance and pensions, using basic mobile phones for banking
• Creation of Credit Guarantee Fund – To provide banks some guarantee against defaults
• Insurance – Accident cover up to Rs. 1,00,000 and life cover of   Rs. 30,000 on account opened between 15 Aug 2014 to 31 January 2015
• Pension scheme for Unorganized sector

 

4. Important approach adopted in PMJDY based on past experience:

 

1. • Accounts opened are online accounts in core banking system of banks, in place of earlier method of offline accounts opening with technology lock-in with the vendor
   • Inter-operability through RuPay debit card or Aadhaar enabled Payment System (AePS)
   • Fixed-point Business Correspondents
   • Simplified KYC / e-KYC in place of cumbersome KYC formalities

 

5. Extension of PMJDY with New features – The Government decided to extend the comprehensive PMJDY program beyond 28.8.2018 with some modifications

• Focus shift from ‘Every Household’ to Every Unbanked Adult’
• RuPay Card Insurance – Free accidental insurance cover on RuPay cards increased from Rs. 1 lakh to Rs. 2 lakh for PMJDY accounts opened after 28.8.2018.
• Enhancement in overdraft facilities –
• OD limit doubled from Rs 5,000/- to Rs 10,000/-;  OD upto Rs 2,000/- (without conditions).
• Increase in upper age limit for OD from 60 to 65 years

 

6. Impact of PMJDY

PMJDY has been the foundation stone for people-centric economic initiatives. Whether it is direct benefit transfers, COVID-19 financial assistance, PM-KISAN, increased wages under MGNREGA, life and health insurance cover, the first step of all these initiatives is to provide every adult with a bank account, which PMJDY has nearly completed.

One in 2 accounts opened between Mar’14 to Mar’20 was a PMJDY account. Within 10 days of nationwide lockdown more than about 20 crore women PMJDY accounts were credited with ex-gratia.

Jandhan provides an avenue to the poor for bringing their savings into the formal financial system, an avenue to remit money to their families in villages besides taking them out of the clutches of the usurious money lenders. PMJDY has brought the unbanked into the banking system, expanded the financial architecture of India and brought financial inclusion to almost every adult.

In today’s COVID-19 times, we have witnessed the remarkable swiftness and seamlessness with which Direct Benefit Transfer (DBTs) have empowered and provided financial security to the vulnerable sections of society. An important aspect is that DBTs via PM Jan Dhan accounts have ensured every rupee reaches its intended beneficiary and preventing systemic leakage.

 

7. Achievements under PMJDY- As on 18^th August’21:

1. PMJDY Accounts

 

• As on 18^th August ’21 number of total PMJDY Accounts: 43.04 Crore; 55.47% (23.87 crore) Jan-Dhan account holders are women and 66.69% (28.70 crore) Jan Dhan accounts are in rural and semi-urban areas
• During first year of scheme 17.90 crore PMJDY accounts were opened
• Continuous increase in no of accounts under PMJDY
• PMJDY Accounts have grown three-fold from 14.72 Crore in Mar’15 to 43.04 Crore as on 18-08-2021. Undoubtedly a remarkable journey for the Financial Inclusion Program.

 

2. Operative PMJDY Accounts –

 

• As per extant RBI guidelines, a PMJDY account is treated as inoperative if there are no customer induced transactions in the account for over a period of two years
• In August’21, out of total 43.04 crore PMJDY accounts, 36.86 crore (85.6%) are operative
• Continuous increase in % of operative accounts is an indication that more an more of these accounts are being used by customers on a regular basis
• Only 8.2% PMJDY accounts are zero balance accounts

 

3. Deposits under PMJDY accounts –

• Total deposit balances under PMJDY Accounts stand at Rs. 1,46,230 crore
• Deposits have increased about 6.38 times with increase in accounts 2.4 times (Aug’21 / Aug’15)

 

4. Average Deposit per PMJDY account –

• Average deposit per account is Rs. 3,398
• Avg. Deposit per account has increased over 2.7 times over Aug’15
• Increase in average deposit is another indication of increased usage of accounts and inculcation of saving habit among account holders

 

5. Rupay Card issued to PMJDY account holders

 

• Total RuPay cards issued to PMJDY account holders: 31.23 Crore
• Number of RuPay cards & their usage has increased over time

 

8. Jan Dhan Darshak App

A mobile application, was launched to provide a citizen centric platform for locating banking touch points such as bank branches, ATMs, Bank Mitras, Post Offices, etc. in the country. Over 8 lakh banking touchpoints have been mapped on the GIS App. The facilities under Jan Dhan Darshak App could be availed as per the need and convenience of common people. The web version of this application could be accessed at the link http://findmybank.gov.in.

This app is also being used for identifying villages which are not served by banking touchpoints within 5 km. these identified villages are then allocated to various banks by concerned SLBCs for opening of banking outlets. The efforts have resulted in significant decrease in number of such villages.

9. Pradhan Mantri Garib Kalyan Package (PMGKP) for PMJDY women beneficieries

As per announcement made by the Hon’ble Finance Minister on 26.3.2020, under PM Garib Kalyan Yojana, an amount of Rs. 500/- per month for three months (April’20 to June’20), was credited to the accounts of women account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY). A total of Rs. 30,945 crore have been credited in accounts of women PMJDY account holders during Covid lockdown

10. Towards ensuring smooth DBT transactions:

As informed by banks, about 5 crore PMJDY accountholders receive direct benefit transfer (DBT) from the Government under various schemes.To ensure that the eligible beneficiaries receive their DBT in time, the Department takes active role in identification of avoidable reasons for DBT failures in consultation with DBT Mission, NPCI, banks and various other Ministries. With close monitoring in this regard through regular VCs with banks and NPCI, the share of DBT failures due to avoidable reasons as a percentage of total DBT failures has decreased from 13.5%  (FY 19-20) to 5.7% (FY 20-21).

 

 

11. The road ahead

 

1. Endeavour to ensure coverage of PMJDY account holders under micro insurance schemes. Eligible PMJDY accountholders will be sought to be covered under PMJJBY and PMSBY. Banks have already been communicated about the same.
2. Promotion of digital payments including RuPay debit card usage amongst PMJDY accountholders through creation of acceptance infrastructure across India
3. Improving access of PMJDY account holders to Micro-credit and micro investment such as flexi-recurring deposit etc.