Financial Untouchability is a situation where people face difficulties in accessing the formal
financial systems which results in forcing the people to borrow from the local money lenders
who would charge high interest rates to the poor people. The only solution for the financial
untouchability is promoting financial inclusion among the people which may be defined as
the process of ensuring access to financial services at adequate time and credit where needed
by people at an affordable cost. Financial inclusion can be attained by ensuring access,
affordability and actual utilization of financial services.
Several studies have shown that there is a positive relationship between poverty and financial
untouchability. Many vulnerable groups such as the weaker section and low income group
people depend on the local money lenders for their financial needs, who charge them with
high interest rates and make them indebted for a long period of time, which results in
financial disequlibrium in the society.
Banks play a major role in the economic development of the country. The health of the
economy is related to the soundness of the banking system in the country. Financial inclusion
is the best path in which the country can eradicate financial untouchability by ensuring the
access of financial resources in the transparent and affordable manner.
Pradhan Mantri Jan Dhan Yojana (PMJDY) is one of the prominent steps taken by the
Government of India towards financial inclusion which was launched by the Prime Minister
of India, Narendra Modi on 28th August, 2014. The scheme was started with intent to provide
universal access to banking facilities starting from basic bank accounts to an overdraft facility
of Rs.5000 and inbuilt accidental insurance coverage of Rs. 1 lakh in RuPay Debit Card and
RuPay Kisan Card.
In the next phase micro insurance and pension facilities etc was introduced. The main
objective of this system is to provide easy access to the financial services to the weaker
sections of the society and low income group people in order to save them from the greedy
local money lenders who would charge them with high interest rates.
Under this scheme, opening of an account in the bank has been made easier where an account
can be opened with zero balance and also the account holders get an inbuilt insurance
coverage from the RuPay Debit Card. This has been initiated to make easy access to credit,
insurance and pension facilities with proper financial literacy.
PMJDY focuses on covering the households as against the earlier plan which included
covering the villages. This means that each household will have access to bank facilities as
against each village. It covers both rural and urban areas.
Pradhan Mantri Jan Dhan Yojana (PMJDY) is a socio-economic initiative in the country
announced by the Prime Minister in his first Independence Day speech at Historic Red Fort.
Jan Dhan Yojana means peoples’ wealth scheme. The slogan of PMJDY is that “Mera Khata
Bhagya Vidhata” which means “My Bank Account” which represents each individual in the
country should have a bank account.
The Government of India along with RBI worked together aggressively in bringing large
populations of India under the banking systems. Khan Commission (2004) recommended
financial inclusion to eradicate financial untouchability by providing transparent credit and
financial services at affordable costs to the weaker sections of the community and low
income grouped people and also to enhance the saving habits among the people by investing
their savings in the bank accounts and earning interests on them. This in turn would also
promote economic growth of the country as people save more and invest more in the bank
accounts which could be used for the developmental activities of the country which acts as an
economic barometer for the country.
Each household opening an account will be benefited with an inbuilt accident insurance
coverage of Rs. 1 lakh and Rs.30000 Life Insurance coverage in RuPay Debit Card. After 6
months of satisfactory transactions, the account holder can avail an overdraft facility up to
Rs.5000 with an interest rate of base plus 2% or 12% whichever is lower. Transferring of
account options are also available if the account holder relocates.
1. Driving licence
3. PAN (Permanent Account Number) Card
4. The Voter’s ID issued by Election Commission of India
5. Aadhar Card
6. Any document which has been notified by the Central Government in consultation
with the Regulator.
7. NREGA issued a job card which has been signed by a state government officer.
To open Pradhan Mantri Jan Dhan Yojana account, the following criteria must be
fulfilled:
• One can fill the form by visiting the official website of
PMJD (https://www.pmjdy.gov.in/scheme).
• One can open an account under this scheme if he is an
Indian citizen.
• One can visit any bank branch or Bank Mitr outlet to
open the account.
• Even minors above 10 years of age can open the bank
account.
1. Shift in focus from Villages to Households
The new policy aims at opening at least 1 bank account per household in both urban and rural
areas. They mainly focus on opening branches in unbanked rural villages.
2. Insurance, Plastic Money and Loan for every Indian
There is a special ‘Zero Balance’ account with RuPay debit card and an accident insurance
cover of Rs 1 Lakh. Further, if the account is opened before 26 January 2015 an additional
life insurance cover of Rs 30,000/- will be given to the account holder. After 6 months of
opening the account, the beneficiary will also become eligible for an overdraft facility of Rs
5,000/-.
3. World record made in India
It is First time in the history of economics of any country of the world, 1.5 Crore people
opened a bank account as well as insurance policy in a single day. A total of 7.5 Lakh bank
employees worked across bank branches and 77000 camps specially setup for this day.
4. Every Indian will become Richer in 10 Years
The nationalization of banks in 1968, led to an increase in domestic savings rate from 13% to
21% over the next decade. If poor India starts saving in banks, thousands of Crores of
liquidity can be pumped back as investments, making everyone richer. Also the poor can be
saved from loan sharks giving more disposable income in their hands.
5. Who will pay the bill
NPCI - National Payment Corporation of India will pay Rs 1/- per person for accident
insurance to HDFC Ergo. The government will pay Rs 90 per person for life cover to LIC.
The bank has to bear the cost of account opening on itself. The question remains, who will
pay for the loss if Rs. 37,500 Cr given as overdraft becomes NPA?
6. High risk of failure, if the loose ends are not tied
They are questions that raised due KYC norms stating 1.5 Cr accounts have been opened
only by unbanked families. As these accounts remain dormant and translate in transaction.
Will some people use it correctly in absence of financial literacy? Linking the Aadhar Card
and payment of all subsidies through these accounts could be possible solutions.
The implementation of Pradhan Mantri Jan Dhan Yojana (PMJDY)
occurred in three phases:
Phase I: 15 August 2014 – 14 August 2015
• PMJDY scheme was implemented during this period with an aim to provide universal
access to banking facilities for all the household families across the country with at
least one basic banking account with RuPay Debit Card which had an inbuilt accident
insurance cover of Rs 1 lakh.
• It provided a financial literacy program to the villages.
• Issuing of the Kisan Credit Card was also proposed during this period.
Phase II – 15 August 2015 – 14 August 2018
• It aimed at providing microinsurance to the people and pension schemes like
Swavalamban to the unorganized sector through the Business Correspondents.
Phase III – after 14 August 2018
• PMJDY focused on opening accounts for every household with an existing Overdraft
(OD) limit of Rs 5,000 to be raised to Rs 10,000. No conditions were attached for OD
up to Rs 2,000.
• The age limit for availing the OD facility was revised from 18-60 years to 18-65
years.
• Under this expanded coverage, an accidental insurance cover for new RuPay card
holders has raised from Rs. 1 lakh to Rs. 2 lakh if the accounts were opened after
28.8.18.
Subsidy Schemes
• Account holders are going to be provided zero balance Bank account with RuPay
open-end credit, additionally to accidental insurance cover of Rs. 1 Lakh.
• Public who had open accounts by January, 2015 over and above 1 lakh accident, they
need a bent life insurance cover of Rs. 30,000 to be give by Life Insurance
Corporation.
• After six months of opening of the checking account, holders can avail 5,000
overdrafts from the bank.
• Overdraft facility is of great support to the people to return out of the clutches of
pawnbrokers who change an exorbitant rate of interest.
• With the introduction of latest technology introduced by National Payments
Corporation of India (NPCI), a person can transfer funds, check balance through a
traditional phone which was earlier limited only to smart phones so far.
• Mobile banking for the poor would be available through National Unified USSD
platform (NUUP) for which all banks and mobile companies have close.
• Account holders receive cheque book, literature on financial literacy and pass book
during a kit.
• Account holder will have open-end credit which may be used for E-Commerce
transactions.
• Additional loan of Rs. 15,000 are going to be sanctioned to the account holder just in
case the repayment of every loan was made on time.
• Mobile banking facility would also be extended.
• Account holders would get attractive rate of interest on deposits besides availing of
pension facility notified by the insurance company.
• Many cases are detected that, where a private has opened quite one account in various
banks.
• Budgetary provisions has not been made by the govt to supply incentives, otherwise
the financial status of the banks may be ruined.
• Insurance companies need to fix a nominal premium to hide the danger of the account
holders just in case it's not done the state owned LIC may batter with financial losses.
• Overdraft facility must be properly regulated, because the same is that the
discretionary of the concerned banks.
• Many banks may decline to increase the overdraft facility therefore defeating the aim.
• Business correspondents if made to accomplish the target may misuse the authority
and thereby making the lifetime of people under below poverty level miserable.
• KYC norms aren't insisted under this programme, therefore duplication is
unavoidable.
• RBI has got to accord approval to banks so on enable them to determine more
branches keeping in sight the number of villages and the population.
• Bank correspondence i.e. bank mitra is that the thought before the finance ministry
whereas creating infrastructure mitra for business mitra, including computers, micro
ATM biometric scanners, and internet connectivity may be a major concern.
• There's a commitment on the a part of the govt to supply Rs. 50,000 towards
equipment, Rs. 25,000 towards working capital and Rs. 50,000 towards vehicle.
These arrangements have been made without budgeting provisions.
• Bank mitra to be appointed in terms of lakhs. They should be properly trained with
accurate knowledge, skill and attitude and thus the result of the training shall be
visible in terms of accomplishing the target.
• Making every village a Swavalamban village is taken into account to be a plus but the
shortage of infrastructure may become a serious hurdle for the effective
implementation.
• Federal Reserve Bank of India has got to set during a roadmap for the financial
inclusion to be effectively implemented by the Indian banking system.
• Private Banks levy hidden charges on the beneficiary which can become a deterrent
for the financial inclusion.
Ministry of Finance is committed to provide financial inclusiveness and support to the
marginalized and hitherto socio-economically neglected classes. Financial Inclusion is a
national priority of the Government as it is an enabler for inclusive growth. It is important as
it provides an avenue to the poor for bringing their savings into the formal financial system,
an avenue to remit money to their families in villages besides taking them out of the clutches
of the usurious money lenders. A key initiative towards this commitment is the Pradhan
Mantri Jan Dhan Yojna (PMJDY), which is one of the biggest financial inclusion initiatives
in the world.
On the 6th Anniversary of PMJDY, Union Minister for Finance & Corporate Affairs , Smt.
Nirmala Sitharaman reiterated the importance of this Scheme “The Pradhan Mantri Jan Dhan
Yojana has been the foundation stone for the Modi government’s people-centric economic
initiatives. Whether it is direct benefit transfers, COVID-19 financial assistance, PM-KISAN,
increased wages under MGNREGA, life and health insurance cover, the first step was to
provide every adult with a bank account, which PMJDY has nearly completed.” she said
Minister of State for Finance & Corporate Affairs, Shri Anurag thakur also expressed his
thoughts for PMJDY on this occasion. He said “Under the leadership of Prime Minister
Narendra Modi, PMJDY has brought the unbanked into the banking system, expanded the
financial architecture of India and brought financial inclusion to over 40 crore account
holders. A majority of the beneficiaries are women and most of the accounts are from rural
India. In today’s COVID19 times, we have witnessed the remarkable swiftness and
seamlessness with which DBTs have empowered and provided financial security to the
vulnerable sections of society. An important aspect is that DBTs via PM Jan Dhan accounts
have ensured every rupee reaches its intended beneficiary and prevented systemic leakage.”
As we complete 6 years of successful implementation of this Scheme, we
take a look at the major aspects and achievements of this Scheme so far.
Background
Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to
ensure access to financial services, namely, Banking/ Savings & Deposit Accounts,
Remittance, Credit, Insurance, Pension in an affordable manner.
1. Objectives
• Ensure access of financial products & services at an affordable cost
• Use of technology to lower cost & widen reach
2. Basic tenets of the scheme
• Banking the unbanked - Opening of basic savings bank deposit (BSBD) account
with minimal paperwork, relaxed KYC, e-KYC, account opening in camp mode, zero
balance & zero charges
• Securing the unsecured - Issuance of Indigenous Debit cards for cash withdrawals &
payments at merchant locations, with free accident insurance coverage of Rs. 2 lakh
• Funding the unfunded - Other financial products like micro-insurance, overdraft for
consumption, micro-pension & micro-credit
3. Initial Features
The scheme was launched based upon the following 6 pillars:
• Universal access to banking services – Branch and BC
• Basic savings bank accounts with overdraft facility of Rs. 10,000/- to every household
• Financial Literacy Program– Promoting savings, use of ATMs, getting ready for
credit, availing insurance and pensions, using basic mobile phones for banking
• Creation of Credit Guarantee Fund – To provide banks some guarantee against
defaults
• Insurance – Accident cover up to Rs. 1,00,000 and life cover of Rs. 30,000 on
account opened between 15 Aug 2014 to 31 January 2015
• Pension scheme for Unorganized sector
4. Important approach adopted in PMJDY based on past experience:
• Accounts opened are online accounts in core banking system of banks, in place of
earlier method of offline accounts opening with technology lock-in with the vendor
• Inter-operability through RuPay debit card or Aadhaar enabled Payment System
(AePS)
• Simplified KYC / e-KYC in place of cumbersome KYC formalities
5. Extension of PMJDY with New features – The Government decided to
extend the comprehensive PMJDY program beyond 28.8.2018 with
some modifications
• Focus shift from ‘Every Household’ to Every Unbanked Adult’
• RuPay Card Insurance - Free accidental insurance cover on RuPay cards increased
from Rs. 1 lakh to Rs. 2 lakh for PMJDY accounts opened after 28.8.2018.
• Enhancement in overdraft facilities -
• OD limit doubled from Rs 5,000/- to Rs 10,000/-; OD upto Rs 2,000/- (without
conditions).
• Increase in upper age limit for OD from 60 to 65 years
6. Achievements under PMJDY- As on 19th Aug’2020:
a. PMJDY Accounts -
• As on 19th Aug’20 Number of Total PMJDY Accounts: 40.35 Crore; Rural PMJDY
accounts: 63.6%, Women PMJDY accounts: 55.2%
• During first year of scheme 17.90 crore PMJDY accounts were opened
• Continuous increase in no of accounts under PMJDY
b. Operative PMJDY Accounts –
• As per extant RBI guidelines, a PMJDY account is treated as inoperative if there are
no customer induced transactions in the account for over a period of two years
• In Aug’20, out of total 40.35 crore PMJDY accounts, 34.81 crore (86.3%) are
operative
• Continuous increase in % of operative accounts is an indication that more an more of
these accounts are being used by customers on a regular basis
c. Deposits under PMJDY accounts –
• Total deposit balances under PMJDY Accounts stand at Rs. 1.31 lakh crore
• Deposits have increased about 5.7 times with increase in accounts 2.3 times (Aug’20 /
Aug’15)
• Average deposit per account is Rs. 3239
• Avg. Deposit per account has increased over 2.5 times over Aug’15
• Increase in average deposit is another indication of increased usage of accounts and
inculcation of saving habit among account holders
e. Rupay Card issued to PMJDY account holders
• Total RuPay cards issued to PMJDY accountholders: 29.75 Crore
• Number of RuPay cards & their usage has increased over time
7. Jan Dhan Darshak App
A mobile application, was launched to provide a citizen centric platform for locating banking
touch points such as bank branches, ATMs, Bank Mitras, Post Offices, etc. in the country.
Over 8 lakh banking touchpoints have been mapped on the GIS App. The facilities under Jan
Dhan Darshak App could be availed as per the need and convenience of common people. The
web version of this application could be accessed at the link http://findmybank.gov.in.
This app is also being used for identifying villages which are not served by banking
touchpoints within 5 km. these identified villages are then allocated to various banks by
concerned SLBCs for opening of banking outlets. The efforts have resulted in significant
decrease in number of such villages.
8. Pradhan Mantri Garib Kalyan Package (PMGKP) for PMJDY women
beneficieries
As per announcement made by the Hon’ble Finance Minister on 26.3.2020, under PM Garib
Kalyan Yojana, an amount of Rs. 500/- per month for three months (April’20 to June’20),
was credited to the accounts of women account holders under Pradhan Mantri Jan Dhan
Yojana (PMJDY). A total of Rs. 30,705 crore have been credited in accounts of women
PMJDY account holders during April-June, 2020.
9. Towards ensuring smooth DBT transactions:
As informed by banks, about 8 crore PMJDY accountholders receive direct benefit transfer
(DBT) from the Government under various schemes. To ensure that the eligible beneficiaries
receive their DBT in time, the Department takes active role in identification of avoidable
reasons for DBT failures in consultation with DBT Mission, NPCI, banks and various other
Ministries. With close monitoring in this regard through regular VCs with banks and NPCI,
the number of DBT failure due to avaoidable reasons has observed significant decline from
5.23 lakh (0.20%) in Apr’19 to 1.1 lakh (0.04%) in Jun’20.
10. The road ahead
• Endeavour to ensure coverage of PMJDY account holders under micro insurance
schemes. Eligible PMJDY accountholders will be sought to be covered under
PMJJBY and PMSBY. Banks have already been communicated about the same.
• Promotion of digital payments including RuPay debit card usage amongst PMJDY
accountholders through creation of acceptance infrastructure across India
• Improving access of PMJDY account holders to Micro-credit and micro investment
such as flexi-recurring deposit etc.
SECTORS RURAL/SEMI-URBAN BRANCHES URBAN AND METRO BRANCHES
Public Sector Banks 204 128.6
Regional rural banks 66 9.4
Private sector banks 6.9 5.6
Total 276.9 143.6
The Government has decided to continue National Mission for Financial Inclusion- PMJDY
with the following modifications:
a) To continue the National Mission for Financial Inclusion (PMJDY) beyond 14.8.2018
b) Existing OD limit of Rs 5,000 to be raised to Rs 10,000
c) There will not be any conditions attached for OD upto Rs 2,000.
d) Age limit for availing OD facility to be revised from 18-60 years to 18-65 years.
e) Under the expanded coverage from “every household to every adult”, accidental
insurance cover for new RuPay card holders to be raised from Rs 1 lakh to Rs 2 lakh
to new PMJDY accounts opened after 28.8.18.
A pipeline has been created for the implementation of PMJDY through which Jan Dhan
accounts and mobile banking have been linked to Aadhar (JAM). This pipeline is not only
facilitating savings, disbursal of credit, social security, etc, but more importantly channelizing
direct benefits of various government schemes to poor people of the country through DBT.
It has been decided to continue the flagship financial inclusion program (PMJDY), with focus
on opening accounts from “every household to every adult”. The pipeline of Jan Dhan-
Aadhar-Mobile (JAM) will continue to provide the necessary backbone for coverage of these
activities and thereby accelerating the pace of digitalised, financially included & insured
society.
They have a “Guinness World Records” Certificate on account
of the “Most Accounts Opened in 1 Week”. The total number of
accounts Opened is 1,80,96,130 between 23rd to 29th of
August, 2014 where there was a financial inclusion campaign as
a part of it.
• Department of Financial Services:
1. Overall ownership of the Mission Mode Project on Financial Inclusion.
2. Overall Monitoring and Implementation of the Mission.
• Reserve Bank Of India (RBI)
• Banks: As defined in the Mission Mode document
• Indian Bank Association( IBA)
• State Governments
• District Administration
• https://www.statista.com/statistics/981216/rural-and-urban-pmjdy-recipients-by-
sector-india/
• https://www.iosriosrjournals.org
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