Bank-led flagship schemes appear to have helped Prime Minister Narendra Modi not only bridge the mental distance between New Delhi and voters in Bharat, but also gain political mileage.

A closer look at various schemes introduced by the BJP-led NDA government in the last five years makes one point clear — while the impact the schemes on the banking system and the macro economy is debatable, they have surely made Modi a household name among rural folks.

The flagship national financial inclusion scheme, Pradhan Mantri Jan Dhan Yojana (PMJDY), launched nearly five years ago, brought some associated benefits such as overdraft facility after satisfactory operation of an account for six months.

Banks are said to have extended this facility to over 10 per cent of operative accounts of PMJDY though there are individual variations among banks. State Bank of India (SBI) found 20.64 lakh accounts eligible for extending over draft facility as on March 31, 2019.

This could translate into big number as there over 35 crore PMJDY account holders with nearly ₹1 lakh crore total balance now.

Some bankers feel the Direct Benefit Transfer (DBT), which has been made possible due to PMJDY, must have spruced up the image of the government. About 1.36 lakh Bank Mitras/business correspondents roaming in the villages and extending last-mile banking to the poor must have kept PM’s name alive in their minds.

Low-cost insurance schemes such as the Pradhan Mantri Jeevana Jyoti Bima Yojana (PMJJBY), the Pradhan Mantri Suraksha Bima Yojana (PMSBY) and the Atal Pension Yojana have been received well in both urban and rural areas. While the PMJJBY offers ₹2 lakh life cover at a premium of ₹330 per annum, the PMSBY offers ₹2 lakh accident insurance at ₹12 per year!

The Prime Minister Mudra Yojana (PMMY) is seen as creating trouble for banks with fast rising non-performing assets (NPS). However, from an user perspective, they must have helped, as petty business loans of ₹50,000 account for the lion’s share in the total loans disbursed over the years. Banks disbursed ₹2.73-lakh crore as on March 31, 2019.

Interestingly, the percentage of NPAs in the Mudra category has been raising, but the beneficiaries surely have some thing to remember while casting their vote.

The flip side

However, the populism needs to be bridled in view of their long-term impact on the banking systems. Neither the overdraft of PMJDY nor Mudra loans are being repaid fully, raising concerns. Insurers say the low-cost insurance schemes are bleeding them. Irregularities have been unearthed in the Fasal Bima Yojana too.

Now that the political mandate has been won, it’s time that the schemes were given a relook to make them both people and economy-friendly.

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