As India celebrates its 75th Independence Day, nearly 43 crore poor beneficiaries in the country now have a basic bank account, thanks to Centre’s flagship financial inclusion scheme, Pradhan Mantri Jan Dhan Yojana (PMJDY).

The scheme, announced by Prime Minister Narendra Modi in August 2014, has dispelled initial apprehensions on its efficacy and proved to be a steady vehicle for financial inclusion.

Also read: Over 5.82 crore Jan Dhan accounts inoperative: Finance Ministry

As per latest government data, PMJDY now has 42.89 crore beneficiaries (basic bank account holders) with ₹1,43,834 crore total balance. More than half of the beneficiaries are women (23.76 crore) while 28.57 crore are from rural and semi urban areas.

‘Unparalled achievement’

When asked on the impact of the scheme so far, D Janakiram, Director, Institute for Development and Research in Banking Technology (IDRBT), an arm of RBI, said, “PMJDY has done extremely well so far... The massive financial inclusion achieved by the scheme is unparalleled.”

A senior official of State Bank of India said the average balance in the accounts which is hovering around ₹3,000-3,500 across banks is ‘an indication’ that the scheme has now become a channel for savings for the low income families.

“The total deposit balance of ₹1.43-lakh crore is actually a huge amount. Our studies have shown that a good number of these accounts are being regularly used,” Prasanna Tantri, Exectuive Director, Center For Analytical Finance, Indian School of Business (ISB) said.

The Global Findex data base of the World Bank has also shown ‘substantial’ increase in financial inclusion in the country after 2014. As per the index, 80 per cent of people above 15 years of age in the lower-middle income group have a bank account now compared to 53 per cent in 2014.

The next step

While the contribution of PMJDY has well been recognised, there is also a need to scale up to the next level, say experts.

Also read: Why PMJDY must be scaled up to next level

“Going forward, we should move from financial inclusion to financial empowerment by providing credit. The PMJDY should become PM Jan Dhan Vridhi with universal access to bank credit to the most underprivileged sections of our society,” the IDRBT chief said.

It would also need a model of credit history, which will require reduction in cash transactions and moving to digital transactions and building credit models using artificial intelligence/machine learning techniques, he added.

“We should think of building India’s next generation digital financial infrastructure focusing on these needs and to reduce per transaction cost as well as the maintenance cost of these accounts,” Janakiram said.

According to Tantri, there is a need to build up a data base to capture the income, transaction history of the Jan Dhan account holders on the basis of which credit delivery models can be worked out. “As of now, we have only aggregate data. Banks and Fintechs can do further data analysis to create a new data base,” he added.