Eight years after its launch, the Pradhan Mantri Jan Dhan Yojana (PMJDY) still shows strong growth in the addition of new accounts, becoming a game-changer for the poor and women who have been left out of the ambit of the banking system.

As on August 31, 2022, PMJDY had 46.46 crore beneficiaries, with a total balance of ₹1,72,507 crore. Of these, 31 crore accounts have been opened in rural- and semi-urban branches, and more than half of the beneficiaries are women at 25.81 crore. The average balance in these accounts is upwards of ₹2,300. According to government data, about 18 per cent of the total accounts are either dormant or inoperative.

The flagship financial inclusion scheme of the Centre was launched in 2014 with a slogan of ‘Mera Khata, Bhagya Vidhata’, and has been growing steadily since then. It has now become the fulcrum of implementation of almost all Government welfare schemes.

It is a national mission on financial inclusion encompassing an integrated approach to bring about the comprehensive financial inclusion of all households in the country. The scheme envisages universal access to banking facilities, with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facilities.

The contribution of PMJDY in achieving financial inclusion has been significant so far. As observed by M Rajeshwar Rao, Deputy Governor, RBI, the Jan Dhan scheme and National Strategy for Financial Inclusion (NSFI) 2019-2024 have given a further fillip to these efforts.

The NSFI defines the vision and key objectives of the financial inclusion policies in India to help expand and sustain the financial inclusion process at the national level through a broad convergence of action involving all stakeholders in the financial sector. It The strategy aims to provide access to formal financial services in an affordable manner, broadening and deepening financial inclusion and promoting financial literacy and consumer protection while the reach of the banks amongst the ranks of the underserved got a boost through the PMJDY.

Without the world’s largest financial inclusion project, the onset and fulfilment of Jan Dhan, Aadhar and Mobile (JAM) Trinity revolution would not have been possible. It has given a financial/banking platform to crores of rural folks, including women, to effectively access Direct Benefit Transfer (DBT) as well as mobile-based UPI transactions.

It has been able to link the previously unbanked sections of the society to seamlessly connect themselves to a common financial, economic and digital space with tangible and intangible social benefits. The scheme also came in handy for rolling out support to poor women during the Covid19 pandemic under the Pradhan Mantri Garib Kalyan Yojana and relief packages of some State governments.

In a way, the Jan Dhan scheme goes beyond financial inclusion and has been delivering results in allied fields, including social security and insurance penetration. There is a huge gap in insurance for the underprivileged in the country. The insurance penetration, measured as a percentage of insurance premiums to the GDPross Domestic Product (GDP), was at 4.20 per cent in 2020-21.

Under the Jan Dhan scheme, the RuPay card comes with an inbuilt accident insurance cover of ₹1 lakh, for up to 90 days after the cardholder carries out a successful financial or non-financial transaction at a merchant establishment, ATM or e-commerce platform.

The economic empowerment of women has also got a shot in the arm with PMJDY. According to a recent study by SBI, “with the advent of the scheme in 2014, the financialisation of women is gaining traction. Both women depositors and women borrowers have increased in the country, as a lot of policies/missions based on lifecycle approach for women, have been implemented by the government in the last 8 years”.

Schemes such as MUDRA loan, Sukanya Samriddhi, women scholarships, Ujjawala, etc. along with PMJDY, further the cause of women’s empowerment. It is interesting to know that wWomen’s share is increasing in all gGovernment-sponsored schemes. The share of women stands at 81 per cent in Stand-Up India, 71 per cent in MUDRA loans, 37 per cent in Pradhan Mantri Suraksha Bima Yojana (PMSBY) and 27 per cent in Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), which is encouraging.”

The study also says: “State-wise analysis shows indicates that the top 4 big States where the share of women depositors increased in FY22 over FY20 are Uttar Pradesh, Telangana, Karnataka and Kerala.” However, the declining share of women depositors in States such as Delhi, Madhya Pradesh and a few north-Eeastern States is quite disturbing and needs course correction at the earliest, the SBI study suggested.

Public sSector bBanks have been playing a major role in expanding the base of Jan Dhan scheme, as well as adding more accounts by women. According to RBI data, the share of women depositors in private sector banks and small finance banks remained constant in FY22, compared to FY20. The share of women depositors in foreign banks declined by about 11 percentage points. Interestingly, the same amount of increase was exhibited in the case of PSBs. And PMJDY has been a determining factor in this regard.

According to Debashis Acharya, Professor, School of Economics, University of Hyderabad, it’s time to go beyond looking at single schemes such as PMJDY.

“In line with the RBI’s financial inclusion index published recently, we need to synergise all inclusion efforts encompassing a bouquet of services – bank accounts, credit, insurance and pension to achieve effective financial inclusion,” he said.

The determinants, namely, income level, industrialisation, infrastructure and gender parity, are seen to positively affect financial inclusion both within and across States, Acharya added.

A peer-reviewed research paper based on an investigation into the convergence in financial inclusion across major Indian States, published by Debashis Acharya and Kamal Sai Sadharma, recommended that policymakers initiate financial inclusion schemes suitable to the local conditions, instead of one-size-fits-all-type policies, especially in the more backward States.

Promoting banking habits and financial literacy in these States is expected to help them catch up with advanced States such as Goa, Punjab, Karnataka and Kerala. Many senior bankers also suggest that Jan Dhan should also become a channel for credit delivery going beyond serving as a no-frills deposit.