The cash balances in no-frills accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY) have been steadily growing, more so in rural areas.

This is verified by the decrease in percentage of zero-balance accounts in the last six months. Government data show that zero-balance accounts as a percentage of total accounts have decreased to 25 per cent during January-June 2016 from 31 per cent.

On an average, accounts with balances are increasing by about 150 basis points a month. In actual numbers, this is substantial as total accounts opened under the scheme so far have touched 22.29 crore with an overall balance of ₹39,251 crore. The scheme is being seen as the biggest financial-inclusion drive in the world since its launch on August 15, 2014.

Public sector banks have overtaken private banks in this regard. The percentage of zero-balance accounts in private banks is a high 37.33 per cent, while in public sector banks and regional rural banks it is 25.61 and 21.35 per cent, receptively.

Zero-balance accounts are lowest in regional rural banks because “bank mitras (business correspondents) are more active and there has been better follow-up,” V Narsi Reddy, Chariman, Andhra Pradesh Grameena Vikas Bank (APGVB), told BusinessLine .

According to Karthik Srinivasan, Head-Financial Sector Ratings, ICRA, disbursal of government benefits as part of Direct Benefit Transfer (DBT) could be a driver.

“There has been a steady increase in seeding of PMJDY accounts with Aadhaar which in turn makes them eligible to receive DBT like LPG subsidy, among others,” J Sitapathi Sarma, General Manager (Financial Inclusion), State Bank of Hyderabad, said. As on date, of the 22.29-crore accounts, 10.59 crore have been linked with Aadhaar.

“In addition, the overdraft facility is a major factor for balances and operation of these accounts,” he says.

Under the scheme, accountholders are eligible for overdraft facility of four times the average balance in the account for six months. So far, 64.5 lakh accounts have been offered overdraft facility.

However, there is need for caution as well, as some people might be holding multiple accounts. According to HR Khan, who recently retired as RBI Deputy Governor, simpler KYC norms for PMJDY could make the scheme vulnerable to frauds. The only way to check this, he said, is to link them with Aadhaar and banks will have to speed up this task.

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