Pradhan Mantri Jan Dhan Yojana: Completes nine years of successful implementation

Pradhan Mantri Jan Dhan Yojana: Prime Minister Shri Narendra Modi announced the PMJDY in his Independence Day address on August 15, 2014. When launching the programme on August 28, 2014, the Prime Minister characterised the occasion as a celebration of the poor’s liberation from a vicious cycle.

As one of the largest financial inclusion initiatives in the world, the Ministry of Finance strives continuously, through its financial inclusion-led interventions, to provide financial inclusion and support to economically disadvantaged and marginalised groups. Financial Inclusion (FI) promotes equitable and inclusive growth as well as the affordable delivery of financial services to vulnerable groups such as low-income groups and weaker sections who lack access to fundamental banking services.

Financial inclusion also incorporates the savings of the impoverished into the formal financial system and enables them to remit funds to their families in the countryside, in addition to freeing them from the clutches of usurious moneylenders.

On the occasion of PMJDY’s ninth anniversary, Union Finance Minister Smt. In her message, Nirmala Sitharaman stated, “Nine years of PMJDY-led interventions and digital transformation have completely transformed financial inclusion in India. Through the opening of Jan Dhan accounts, more than 50 crore individuals have been brought into the formal banking system. 55.5 percent of these accounts belong to women, and 67 percent were opened in rural or semi-rural areas. The total deposits in these accounts exceed 2 trillion rupees. Moreover, approximately 34 billion RuPay cards have been issued free of charge to these accounts, which also provide a 2 lakh calamity insurance cover.”

“With the collaborative efforts of stakeholders, banks, insurance companies, and government officials, the PMJDY stands out as a pivotal initiative,” Smt. Sitharaman reported.

Pradhan Mantri Jan Dhan Yojana Success

Dr. Bhagwat Kishan Karad, Union Minister of State for Finance, also shared his thoughts on PMJDY on this occasion. He stated, “PMJDY has reduced financial untouchability by drawing marginalised segments of the population into the formal banking system. The scheme’s results are far-reaching and have a multiplier effect on the economy as a result of its provision of banking facilities to vulnerable segments of the population, facilitation of access to credit, provision of insurance and pension coverage, and promotion of financial literacy. Additionally, the Jan Dhan–Aadhaar–Mobile (JAM) architecture has enabled the successful and seamless transmission of government benefits to the bank accounts of the common man. PMJDY accounts have become the focal point of people-centered initiatives such as DBT and have contributed to the inclusive growth of all segments of society, particularly the disadvantaged.”

As we approach the completion of nine years of successful implementation of this Scheme, we examine its most significant features and accomplishments to date.

Pradhan Mantri Garib Kalyan Yojana (PMGKY): All you need to know

Background

The Pradhan Mantri Jan Dhan Yojana (PMJDY) is the National Mission for Financial Inclusion to provide affordable access to banking/savings/deposit accounts, remittance, credit, insurance, and pension.

Objectives of Pradhan Mantri Jan Dhan Yojana

• Ensure affordable access to financial products and services

• Use of technology to reduce costs and broaden access

Principles of the scheme

Banking for the unbanked – Opening of basic savings bank deposit (BSBD) accounts with minimal documentation, relaxed KYC, e-KYC, account opening in camp mode, zero balance, and zero fees.

Securing the unsecure – Issuance of Indigenous Debit Cards for cash withdrawals and payments at merchant locations, with complimentary Rs. 2 lakhs accident insurance coverage

Financing the unfunded – Additional financial products such as micro-insurance, overdraft for consumption, micro-pension, and micro-credit

Characteristics of Pradhan Mantri Jan Dhan Yojana

The initiative was initiated on the basis of the following six pillars:

• Universal bank service accessibility – Branch and BC.
• Basic savings bank accounts with a Rs. 10,000 overdraft facility for all eligible adults
• Financial Literacy Programme – Promoting savings, ATM use, credit readiness, insurance and pension access, and the use of fundamental mobile phones for banking
• Establishment of a Credit Guarantee Fund to protect institutions against defaults
• Insurance – Up to Rs 1,000,000 in accident cover and Rs 30,000 in life cover for accounts opened between 15 August 2014 and 31 January 2015.
• Pension plan for the Unorganised sector

Critical PMJDY strategy adopted based on experience:

Online accounts are opened in the central banking system of banks, as opposed to the previous offline method, which resulted in technology lock-in with the vendor.

Interoperability using a RuPay debit card or an Aadhaar-enabled Payment System (AePS).

• Standard Business Correspondence
• Simplified KYC / e-KYC in lieu of laborious KYC procedures

Extension of PMJDY with New Features

The government has decided to extend the comprehensive PMJDY programme past August 28, 2018, with some modifications.

• The emphasis has shifted from ‘Every Household’ to ‘Every Unbanked Adult’
• RuPay Card Insurance – The complimentary accidental insurance coverage on RuPay cards has been increased from Rs. 1 lakh to Rs. 2 lakhs for PMJDY accounts opened after August 28, 2018.
• Enhancement of overdraft facilities: OD limit doubled from Rs 5,000/- to Rs 10,000/-; OD upto Rs 2,000/- (without conditions) and OD age cap increased from 60 to 65 years

Effects of PMJD

PMJDY has served as the foundation for economic initiatives centred on people. Whether it is direct benefit transfers, COVID-19 financial assistance, PM-KISAN, increased wages under MGNREGA, or life and health insurance coverage, the first stage in all of these initiatives is to provide every adult with a bank account, a task that PMJDY is nearly finished with.

Between March 2014 and March 2020, one out of every two accounts opened was a PMJDY account. Within ten days of a nationwide closure, approximately 20 crore women’s PMJDY accounts were credited with Rs 500 per month for three months via DBT.

During the COVID-19 pandemic, Direct Benefit Transfers (DBTs) empowered and provided financial security to the most vulnerable segments of society with remarkable speed and efficiency. DBTs through PMJDY accounts have ensured that every rupee reaches its intended recipient, thereby preventing systemic leakage.

PMJDY has brought unbanked individuals into the banking system, broadened India’s financial architecture, and brought financial inclusion to nearly every adult.