Pradhan Mantri Jan-Dhan Yojana

Pradhan Mantri Jan-Dhan Yojana

What is PMJDY?
PMJDY is a financial inclusion program launched in 2014, aiming to provide universal access to financial services like basic savings and deposit accounts, remittances, credit, insurance, and pensions at an affordable cost. It serves as a cornerstone for poverty alleviation and economic empowerment.

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Features of PMJDY

1. No Minimum Balance Requirement:
   • No mandatory minimum balance is required for PMJDY accounts.
2. Free Debit Card:
   • Account holders receive a free RuPay Debit Card.
3. Accident Insurance:
   • Accounts opened after 2018 receive accident insurance coverage of ₹2 lakh (₹1 lakh for older accounts).
4. Overdraft (OD) Facility:
   • Eligible account holders can avail overdraft of up to ₹10,000.
5. Direct Benefit Transfer (DBT):
   • PMJDY accounts support DBT schemes like PMJJBY, PMSBY, APY, and MUDRA.
6. Optional Cheque Books:
   • Cheque books are not free but can be issued on request, subject to the bank’s discretion.

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Challenges Associated with PMJDY

1. Multiple Accounts:
   • People often open multiple accounts in different banks to exploit benefits, increasing system inefficiencies.
2. Economic Burden on Banks:
   • Persistent low balances in many accounts strain banking resources and profitability.
3. Money Laundering Concerns:
   • Instances of Jan Dhan accounts being misused for laundering money, especially post-demonetization.
4. Declined Overdrafts:
   • Banks often deny OD facilities due to operational risks, defeating the program's purpose.
5. Business Correspondent (BC) Misuse:
   • BCs may exploit account holders by charging extra fees or withholding benefits.
6. Bad Loans:
   • Overdrafts might turn into non-recoverable bad loans, leading to financial losses for banks.
7. Financial and Technological Illiteracy:
   • Many account holders, especially in rural areas, lack financial literacy and skills to effectively use banking facilities.

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Achievements

• The Pradhan Mantri Jan-Dhan Yojana (PMJDY) has achieved significant milestones in promoting financial inclusion and providing access to formal banking services for the unbanked population of India. Here are the major achievements of the scheme:
  1. Account Expansion
  • PMJDY has grown substantially, with the number of accounts increasing from 147 million in March 2015 to 520 million in March 2024.
  • A large portion of the accounts are held by women and in rural areas, highlighting inclusivity.
  2. Deposit Mobilization
  • Deposits in Jan-Dhan accounts increased from ₹15,600 crore in March 2015 to ₹2.32 trillion in March 2024.
  • The deposits grew at a compound annual growth rate (CAGR) of 30% over the past decade.
  • The average account balance quadrupled from ₹1,065 in 2015 to ₹4,476 in 2024.
  3. Expansion of Banking Infrastructure
  • Over 1.3 million banking touchpoints have been mapped through the Jan Dhan Darshak App, enabling citizens to easily locate banks, ATMs, and other banking facilities.
  • Nearly 99.7% of the 601,000 mapped villages have banking outlets within a 5 km radius, bridging the rural-urban gap.
  4. Promoting Rural-Urban Parity
  • Among the 53.13 crore accounts opened under PMJDY, 66.6% are in rural and semi-urban areas, while 55.6% are owned by women. This reflects the scheme's success in reaching underserved populations.
  5. Boost in Digital Payments
  • UPI transactions surged from 920 million in FY 2018 to 131.2 billion in FY 2024, indicating increased adoption of digital payments.
  • RuPay card transactions also witnessed significant growth, rising from 670 million in FY 2018 to 1.26 billion in FY 2023, at PoS terminals and e-commerce platforms.
  6. Support for Direct Benefit Transfers (DBT)
  • PMJDY enabled direct transfer of ₹361 billion (USD) to beneficiaries under 53 central government schemes.
  • During the COVID-19 pandemic, it facilitated the disbursal of ₹500 per month for three months to 206.4 million women account holders under the PM Garib Kalyan Yojana.
  7. Overdraft Facilities
  • As of March 2024, 1,17,701 overdraft accounts were sanctioned with a total of ₹190 crore, ensuring access to credit for the economically disadvantaged.
  • Utilization of the overdraft limit stands at 80.5%, indicating effective usage.
  8. Low Zero-Balance Accounts
  • Despite the provision for zero-balance accounts, only 8.4% of PMJDY accounts have no balance, reflecting active account usage.
  9. Global Recognition
  • The World Bank praised PMJDY, stating that India achieved in six years what would have typically taken five decades.
  • The JAM (Jan Dhan-Aadhaar-Mobile) trinity has increased financial inclusion rates to 80% of adults in 2024 from 25% in 2008, driven by robust Digital Public Infrastructure (DPI).

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Way Forward

1. Centralized Verification System:
   • Prevent account duplication with biometric and digital identity verification systems.
2. Incentivizing Single Accounts:
   • Offer enhanced benefits for maintaining a single account to reduce system misuse.
3. Expanded Financial Literacy:
   • Implement national-level campaigns to educate rural populations about financial products and services.
4. Insurance Coverage:
   • Extend micro-insurance and flexible deposit schemes to PMJDY account holders.
5. Focus on Micro-Credit:
   • Improve access to micro-credit, enabling account holders to use overdrafts as a growth tool.
6. New Focus Areas:
   • Cover all adults, including those newly acquiring adulthood, to ensure universal financial inclusion.

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Key Takeaways
PMJDY has revolutionized financial access in India, but addressing challenges like misuse, low account activity, and financial illiteracy is essential for sustainable impact. Its success can act as a foundation for achieving India’s vision of Viksit Bharat by 2047.

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