With over 40 crore beneficiaries in its kitty in last six years, Pradhan Mantri Jan Dhan Yojana (PMJDY) can now be scaled up in terms of offerings.
The flagship financial inclusion scheme of the Centre, which has been dubbed as biggest inclusive scheme in the world, has a steady growth since its introduction on August 15, 2014.
“PMJDY not only provided the much-needed last mile connectivity to the banking sector but also opened up a new opportunity for banks to boost the Current Account and Savings Accounts (CASA), among others,” Kare Bhaskara Rao, Chief General Manager, Union Bank of India, Telangana told BusinessLine.
The trajectory of growth in the number of beneficiaries (account-holders), total balance and average balance has dispelled the fears among some banks that the no-frills/zero balance accounts of Jan Dhan would actually become burden for banks due to maintenance costs.
“But now, the average balance across public sector banks is at ₹3,283. Many of the normal customers are also not maintaining this balance in their accounts,” Rao said.
According to senior official of State Bank of India (SBI), the dormancy rate in the accounts which is at 15 per cent on an average (it varies from bank to bank) is also another indication of the popularity of the scheme.
This could actually be lower if one factors the dormancy due to multiple accounts of a beneficiary in different banks.
“The demonetaisation and Covid-19 pandemic have pushed the scheme positively. While demonetisation brought in the need for use of cards, Covid-19 Atma Nirbhaar Package pushed balance by thousands of crore,” the SBI official said.
Prasanna Tantri, Executive Director, Centre for Analytical Finance, Indian School of Business (ISB), who conducted a study, said that the operational modalities of the scheme, patterns of usage of accounts and average balance are interesting.
Active transactions
“Our transaction-based study indicated that people are transacting with these accounts actively and using them for building balance as well as safe keeping of money especially by women with drunkard husbands in rural areas,” said Tantri.
The withdrawal patterns show a ‘crisis - response’ tendency, he added. “There were higher withdrawals in case of natural calamities and emergencies. Even in Covid package, a part of financial transfers, has been withdrawn but still some funds are kept in accounts,” he said.
The data supports this view as there has been an increase in balance by about ₹12,000 crore, from ₹1,19,680 crore to ₹1,30,701 crore, from April-August 2020.
While the scheme is being seen as ‘an unquestionable success’ by bankers and many analysts, there is still way to go, said experts.
Bhaskar Rao said that the Overdraft cap can be increased depending on the nature of transactions in the accounts. The upper cap of pre-approved over draft is now at ₹10,000. Similarly, insurance coverage, which is at ₹2 lakh (accident coverage) now can also be increased.
If the nature of scheme could be changed from credit savings-driven to credit-driven, it will augur well for rural customers and economy, said Tantri.
According to sources, the Finance Ministry is currently examining the feasibility of providing credit access to Jan Dhan beneficiaries in some categories on a pilot basis.
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