Money & Banking

PMJDY usage more frequent in areas prone to crime: SBI report

Our Bureau Mumbai | Updated on October 27, 2020

PMJDY envisages universal access to banking facilities with at least one basic banking account for every adult, financial literacy, access to credit, insurance and pension

The report says the pandemic has led to a 60% increase in new Jan Dhan accounts

Usage of the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts increases over time in regions that are more prone to theft, according to State Bank of India’s economic research report ‘Ecowrap’.

The report underscored that empirical research suggests that PMJDY accounts work as a primary vehicle for labour remittances, apart from increased lending, smoothing consumption, increased spending on healthcare and most importantly the usage is more frequent in areas that are more crime prone.

Acknowledging that the genesis of crime can also be traced to interplay of various social, economic, demographic, local and institutional factors, apart from putting more money in accounts at the lower strata of society, there is evidence of PMJDY accounts having some impact on crime, the report said.

“Thus, some of the states like Uttar Pradesh, Maharashtra and Haryana may have witnessed a lagged impact of the usage of PMJDY accounts and thus a positive impact on theft.

Pandemic beats DeMon: Jan Dhan accounts surge, by numbers and balance, in April-Oct

“States like West Bengal, Tamil Nadu and even Kerala have seen a continuous impact since inception. States like Gujarat and Karnataka have also seen a favourable impact,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

PMJDY envisages universal access to banking facilities with at least one basic banking account for every adult, financial literacy, access to credit, insurance and pension. It was launched in August 2014 under the National Mission for Financial Inclusion.

Change in individual behaviour & social harmony

“The usage of PMJDY that is causing the change in individual behaviour is the same across all states and uniform across all (individuals),” the report said.

Hence, SBI’s economic research department, which has put together the ‘Ecowrap’, recommended the Government strive to put more money into such accounts as a sort of third fiscal stimulus, possibly through enlarging the National Rural Employment Guarantee Act (NREGA) scheme or through a scheme for the urban poor.

The report observed that it is a matter of satisfaction that the usage of such PMJDY accounts in the current unprecedented times has helped maintain social harmony.

Number of accounts surge

As per the latest data of October 14, 2020, the total number of PMJDY accounts stood at 41.05 crore with a total balance of ₹1.31-lakh crore. Since April 1, around three crore accounts were opened, with a total rise in deposits of ₹11,060 crore in PMJDY accounts.

The SBI report says the pandemic has led to a 60 per cent increase in new Jan Dhan accounts.

The average balance of PMJDY accounts increased to ₹3,400 in April and declined thereafter to ₹3,168 in September; it is now marginally up at ₹3,185 in October 2020.

Thus, the initial increase in average balance that was primarily due to the loss of livelihood due to the pandemic and the shift of migrant labourers from urban areas to their homes in rural areas, resulting in a jump in precautionary savings, may have been reversed,the report said.

Jan Dhan: Beyond a mere account

“Our activity index indexed at February at 100, which showed increased momentum in September continues to improve in October, with our latest reading slightly above 90, mainly because of higher RTO (regional transport office) revenue collections and higher mobility as indicated by Google workplace mobility. This is however the most crucial phase,” said Ghosh.

Migrant labourers return to work


data indicates that there was a significant reduction in remittances due to lockdown and it touched the lowest level in April. However, it increased in June and July, and in September it crossed the pre-Covid-19 level, as witnessed in February.

“Thus, it seems the migrant labourers are coming back in adequate numbers to workplaces for livelihood and that too much before Diwali as was largely expected.

“Additionally, during April-August 2020, 25 lakh new EPF subscribers have joined in, of which 12.4 lakh were first-time payroll entrants. The point of concern though is that the degree of formalisation has dropped significantly to 6 per cent in FY21 from an average of 11 per cent in earlier years,” Ghosh said.

As per the report, the increase in remittances though is in perfect coordination with increase in payroll. The jump in payroll leads to higher remittances.

Published on October 27, 2020

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