Financial inclusion. The Inclusivity push: PMJDY adds 1.3 crore beneficiaries in H1 of FY22

Interest in the Pradhan Mantri Jan Dhan Yojana (the world’s largest financial inclusion scheme, continues unabated with 1.30 crore new beneficiaries getting added in the first half of the financial year 2021-22.

The total number of beneficiaries has gone up to 43.50 crore at the end of September 2021 while it was at 42.20 crore on April 1, 2021. The total balance in the basic savings bank accounts opened under the scheme, however, almost remained flat at ₹1,45,272 crore (as on September 29, 2021), as per the government data.

The continued growth in the number of accounts is driven by strong efforts by the banks as well as increasing interest among the low-income groups in seeing the scheme as a ‘passport’ to government schemes, according to bankers.

“In actual terms, the number would have been much higher but the first quarter of the current fiscal had seen the massive impact of the second pandemic wave, resulting in scaling down of operations and deployment of staff on a staggered basis by the public sector banks,” said a senior official of SBI, adding that “utmost priority” is being given to the scheme.

Interestingly, the first half of the last financial year (FY2020-21) was better for the flagship financial inclusion drive of the Centre.

Despite the first wave of the pandemic and the national lockdown from the end of March 2020, there was a massive addition of 2.83 crore new beneficiaries between April 1 and September 30, 2020, with the total number of beneficiaries increasing from 38.07 crore to 40.90 crore. “The rollout of some of the benefits of Pradhan Mantri Garib Kalyan Yojana as Covid relief to Jan Dhan accounts holders had led to a greater rush in opening new accounts last year. If we exclude that impact, the surge in new numbers in the first half of current fiscal year is impressive, thanks to efforts of the public sector banks,” said an economist with a leading private bank, adding that the private sector banks are placing the scheme on the back burner.

Enabler

The expansion of the financial inclusion scheme in the country is still on. As on November 10, 2021, the total beneficiaries stood at 43.85 crore even as the total balance in the accounts edged up to ₹1,48,069 crore. Thus, the scheme has come a long way since its launch in 2014 offering a host of benefits to the beneficiaries. PMJDY has now become an effective enabler for the digitisation of financial transactions apart from being a tool to bring the unbanked into the ambit of the formal banking system.

This has been ably supported by initiatives to ensure last-mile delivery of banking services through innovative banking channels like the ‘BC model’. Thanks to technology, there has been a massive improvement in the deepening of digital financial services, more so after the demonetisation of 2016.

The Jan Dhan, Aadhaar and Mobile (JAM) ecosystem has made a significant difference in the universe of financial inclusion. PMJDY formed the bedrock of Reserve Bank’s pilot project, launched in 2019, in association with banks of making at least one district in each State/UT 100 per cent digitally enabled. This project covered 42 districts and was aimed at facilitating greater access and usage of digital payments by the common man.

The State Level Bankers’ Committees (SLBCs) have been advised by RBI to give renewed focus and emphasis to ensure sustenance of the digital progress in these identified districts. Further, to promote ‘universal access to financial services’ under the National Strategy for Financial Inclusion (NSFI), access to some form of banking outlet has been provided to 99.9 per cent of the targeted villages within a 5 km radius/ hamlets with 500 households in hilly areas. All these efforts are being supported to a larger extent by the Jan Dhan scheme. According to RBI data, as of March 2021, banks have achieved a digital coverage of 95.9 per cent of individuals while the achievement for businesses stood at 89.8 per cent.

Road ahead

The achievements of PMJDY have been duly recognised by many. While there is much to cheer over the progress made so far, it is pertinent that the scheme needs to be scaled up on a priority basis. The government in particular and banks, in general, must continue their efforts for greater financial inclusion in pursuance of the goal of a sustainable future for all. There is a need to speed up the issue of RuPay cards to Jan Dhan account holders.

Almost 28 percent of PMJDY beneficiaries are yet to be issued RuPay Cards. Out of 43.85 crore beneficiaries (as on November 10, 2021), 31.72 crore have been issued the cards.

As observed by the RBI governor Shaktikanta Das recently, there is a need for an accelerated universal reach of bank accounts along with access to financial products relating to credit, investment, insurance and pension.

It is the responsibility of all the stakeholders to ensure that the financial ecosystem (including the digital medium) is inclusive and capable of effectively addressing the risks like mis-selling, cyber security, data privacy and promoting trust in the financial system through appropriate financial education and awareness. These efforts have to be supported by a robust grievance redressal mechanism, according to Das.

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