PM Jan Dhan Yojana accounts see record 24% rise in average balance

Accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY), the flagship financial inclusion scheme, have been witnessing a steep hike in average balance.

There has been a rise of up to 24 per cent in the average balance of these accounts across banks during the last one year, according to individual data available with major banks. Banks claim the surge is the highest so far.

State Bank of India (SBI) witnessed an increase of more than 24 per cent in the average balance of financial inclusion accounts to ₹1,988 in December 2018, against ₹1,594 in the year-ago period.

For Bank of Baroda, the same had gone up from ₹2,875 to ₹3,169, while Punjab National Bank registered an increase from ₹1,879 in December 2017 to ₹2,217 in December 2018.

A senior SBI official attributed this to a general increase in transactions, as well as deposits, in these accounts.

“There is greater awareness about add-on facilities such as overdraft, insurance, as well as direct benefit transfer, which is also aiding to these accounts,” he said.

While 20.46 lakh accounts were found eligible for OD facility, SBI had extended it to over 50 per cent of these accounts.

From what was once seen as white elephants, financial inclusion is leading to an increase in Current Accounts and Savings Accounts (CASA) for banks. Canara Bank, for instance, has secured ₹2,215 crore as CASA deposits from PMJDY accounts as per the last quarter figures. While all banks posted increase in overall balances, the total balance under PMJDY in all banks put together is at ₹90,217.40 crore, as on February 6, 2019, with 34.26 crore beneficiaries.

Zero balance accounts have been coming down by 3 per cent in most banks at an individual level. The overall zero balance accounts is now in the range of 17-19 per cent, according to bankers.

PMJDY, which was launched in August 2014, has been made an open-ended scheme by the government in view of its ‘success’, which means it will continue to extend all benefits indefinitely. Moreover, the government had also doubled the overdraft limit from ₹5,000 to ₹10,000 last year. Nearly 55 per cent of the beneficiaries are women from rural and semi-urban areas.

Limitation

A field-level enquiry with a few business correspondents (there are 1.26 lakh of them who are also Bank Mitras), however, shows that the upper cap on balances at ₹50,000 has become a constraint for some customers.

“Earlier, banks used to automatically upgrade PMJDY accounts to regular accounts if there was an increase in the average balance. But now they have stopped it even as some accounts holders prefer it,” B Raju, a Bank Mitra in Polavaram village, in Andhra Pradesh, told BusinessLine .

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