As the Pradhan Mantri Jan Dhan Yojana (PMJDY) completes nine years in few weeks, the total number of beneficiaries is set to cross the 50 crore mark, making it the world’s largest scheme for financial inclusion.
The number of total account holders under PMJDY, which was launched on August 15, 2014, has reached 49.56 crore as on July 19, 2023, with a total outstanding of over ₹2-lakh crore. Of this, 27.56 crore are women from both rural and urban areas. On average, 5.5 crore people have been brought under the purview of the scheme, the pace of which gained momentum during recent years, especially after Covid. For instance, the number of beneficiaries stood at 35 crore in April 2019, which rose to 42.20 crore in April 2021 and touched 45 crore in April 2022. At present, it stands at 49.56 crore.
PMJDY has been one of the enablers for inclusive and sustainable growth in India, according to Bibekananda Panda, Senior Economist, State Bank of India. “JAM trinity (Jan Dhan, Aadhaar, Mobile) has been a game-changer in India as the PMJDY, the Aadhaar biometric infrastructure, and mobile and digital penetration, have helped to make significant strides in providing last-mile delivery of banking services to underserved communities. Female PMJDY account holders are the prime customers for banks today,’‘ said Panda.
Research by Women’s World Banking shows that women Jan Dhan customers are more profitable than men, as women are committed savers and, moreover, a female Jan Dhan customer’s lifetime revenue is at least 12 per cent higher than that of a male customer’s, he added.
Despite initial doubts about the viability of maintaining no-frills accounts, public sector banks have been pushing the scheme aggressively as reflected in the rapid pace in the number of the beneficiaries. The average balance in these accounts is around ₹2,600-2,800, while about 20 per cent of the total accounts are dormant or inoperative, according to data available with banks.
To make the best out of it, banks are attracting PMJDY holders with innovative strategies to deepen their financial engagement through various innovative mechanisms, including, offering financial products such as microinsurance, pension, and micro-credit. “This is helping banks in building credit histories of these account holders. Moreover, small value credit are new to credit customers and are like gold mines for banks as customers have several unfulfilled needs which banks can cater to,” said the SBI economist.
Public sector banks are the fulcrum of the Jan Dhan scheme. Of the 49.56 crore beneficiaries, 24.40 crore are with public sector banks, while 7.92 crore accounts are with the Regional Rural Banks. Participation of private banks is only 0.71 per cent of the total pie, indicating their hesitance, perhaps for due to elevated costs of operating in the segment. PSU banks largely operate on a banking correspondent model to take the scheme forward.
The associated benefits, such as channeling welfare schemes of the Central and State government through Direct Benefit Transfer (DBT) PMJDY accounts, are also motivating people to open these accounts. A large fleet of 8.50 lakh bank mitras are also behind the popularisation of the scheme.
PMJDY has now become an umbrella scheme that is facilitating the implementation of other key schemes of the Centre such as Pradhan Mantri Mudra Yojana (PMMY), along with crop, life, and general insurance schemes.
Under the RuPay Debit/ATM card comes with an inbuilt accident insurance cover of ₹1 lakh, for up to 90 days after the cardholder carries out a successful financial or non-financial transaction. There are also provisions for overdraft subjected to certain conditions.
However, there has been a lag in the issue of RuPay debit cards of National Payments Corporation of India (NPCI) for Jan Dhan account holders. Of the total over 49 crore accounts, only 34 crore cards have been issued so far, which makes operation of the accounts difficult for beneficiaries. The inadequate issue of cards has made withdrawing money from these accounts through ATMs an arduous process, and if the government aims to remain steadfast on its Jan Dhan commitment, this is an area that needs quick and prompt fixing. There are more actions required as well.
NEED OF THE HOUR
There is a need to make the scheme more effective and tighten it to achieve the promised benefits of financial inclusion, according to Arun Kumar, an Economist and former professor at Jawaharlal Nehru University (JNU), New Delhi.
“Financial inclusion is not just having a bank account, but also easily gaining access to credit. A bank account benefits the poor only if it enables them to get working capital for livelihood or to sustain them,” said Kumar, adding the poor cannot afford to have a balance in their Jan Dhan accounts when their basic needs remain unfulfilled. Accounts with deposits possibly belong to those who are better off.
It also needs to be ensured that the PMJDY beneficiaries are not used as cash mules, which could have happened during the demonetisation of 2016, he pointed out.
Also, while extending loans, a greater scrutiny of the account holder’s profiles are the need of the hour to make Jan Dhan Yojana more efficacious, Kumar said.
DATA FOR TABLE:
Growth in total balance of Jan Dhan accounts (in Rs Cr)
April 2018: 79,012
April 2019: 97,665
April 2020: 1,19,680
April 2021: 1, 46,084
April 2022: 1,67,598
April 2023: 2,01,598
July 2023: 2,00,590