The use of Prime Minister’s Jan Dhan Yojan (PMJDY) as a vehicle for micro-insurance policies as well as pensions as announced in the Union Budget 2018 is an opportunity as well as challenge. It an opportunity because of the vast reach it could bring in for the policy-makers as well as the banks.

As on January 21, 2018, there are 30.01 crore accounts under the Jan Dhan with a total balance of Rs 73,588 crore. The average balance under this no-frills accounts is in the range of Rs 2200 to Rs 2500, according to Government data.

Though the structure of the proposed mega health insurance scheme with cover up to Rs 5 lakh has not been out yet, mostly it will be linked to Jan Dhan in some way. The insurance schemes, if offered through PMJDY, can be viable to some extent as the premium deduction could be possible in view of balances in the accounts.

Awareness an issue

However, Jan Dhan account and the use of RuPay card already offers an insurance benefit to the account-holders which needs to be synchronised with any new micro-insurance schemes which could be bundled together with these accounts.

Further, the awareness about insurance among this segment of customers is certainly low. Most of them are okay with free cover. How one convinces them to buy insurance, even though the premium could be very low for micro insurance policies, is a challenge for the government going forward.

With reference to pensions, PMJDY accounts are already being used for disbursal of welfare pensions for widows, senior citizens and physically challenged. The gamut may now needs to be expanded.

While there is more to be glad about the reach of the Jan Dhan, there are concerns too. According to bankers, 25-30 per cent of the accounts are still inoperative. The RuPay cards have been issued only to 23.40 accounts. These aspects need to be addressed. The underlying philosophy should be using Jan Dhan for weath creation, not only for distribution.

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