Money & Banking

Jan Dhan now a ‘profitable’ venture for banks

G Naga Sridhar Hyderabad | Updated on August 02, 2019 Published on August 01, 2019

Steady surge in average balance across banks in the last one year

The Pradhan Mantri Jan Dhan Yojana (PMJDY), which is a no-frills account facility for the poor, has become ‘profitable’ for banks, with a steady surge in the average balance across lenders.

According to the numbers announced by banks for the first quarter ended June 30, 2019, there has been a steady rise in Jan Dhan average balance in these accounts up to ₹800 in the last one year. This varies from bank to bank.

A senior official with Punjab National Bank said financial inclusion under the scheme “has now become a profitable proposition”, with a surge in the average balances in PMJDY accounts and their regular use.

Average balance in the accounts went up to ₹2,463 in June 2019, compared to ₹1,937 in June 2018.

In June 2017, the average balance was ₹1,773. An examination of the numbers available with banks such as Indian Overseas Bank, Allahabad Bank and Canara Bank for the last one to two years shows a similar trend with almost similar increase in balance as well as dip in zero-balance accounts.

State Bank of India (SBI), which is yet to announce the first quarter numbers and is now in the silent period, has also been witnessing a steady increase in average balance in Jan Dhan accounts, which could be hovering at around ₹2,400 as of now, according to sources. At the end of March 2019, the balance was at ₹2,192, against ₹1,787 in the previous year

Drivers of growth

According to bankers, regular mobilisation of deposits by Bank Mitras (business correspondents) in rural areas is a reason for the general increase in PMJDY balances.

As on July 24, 2019, there were 1.26 lakh Bank Mithras delivering branch-less banking services in sub-service areas for Jan Dhan account-holders across the country. The total balance in 36.41-crore accounts stood at ₹1.09-lakh crore. About 30 crore RuPay Debit cards have been issued to beneficiaries so far.

The recent increase of overdraft facility for beneficiaries, from ₹5,000 to ₹10,000; removal of any conditions for using OD up to ₹2,000; increase in upper age limit for availing OD facility, from 60 to 65 years; and the hike in accident insurance cover, from ₹1 lakh to ₹2 lakh, have also been making PMJDY accounts attractive.

Published on August 01, 2019
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