Pradhan Mantri Jan-Dhan Yojana (PMJDY), which was launched on August 28, 2014, with the motive of ‘Banking the Unbanked’, with 179 million accounts being opened in the first year itself, is today the world’s largest financial inclusion scheme. PMJDY’s objective has been to ensure accessibility to various financial services like the availability of basic savings bank accounts, need-based credit, remittance facilities, insurance, micro-credit and pension to excluded sections (weaker sections and low-income groups).
PMJDY accounts hit nearly 490 million (49 crore) in the last nine years, with deposits at over a solid Rs 2 lakh crore. Operative accounts as a percentage of the total accounts stood well over a healthy 81 percent. Average deposits rose to Rs 3761 in August 2022, from Rs 3398 in the preceding year. The average deposit per account is up over 2.9 times from Rs 1279 in August 2015. The increase in the average deposit is an indication of increased usage of accounts. PMJDY has expanded its coverage to over 67 percent of the rural and semi-urban areas and has over 56 percent women account holders in a remarkable example of not only being the world’s largest financial inclusion scheme, but also being gender sensitive. About 80 million PMJDY account holders receive direct benefit transfers (DBT) from the Modi government. Less than 8 percent of the accounts have zero balance.
Public sector banks are the key drivers for the scheme, holding Rs 1.55 lakh crore with them as deposits, followed by Regional Rural Banks (RRBs) with Rs 38,832 crore and private sector banks hold the remaining deposits. Digital transactions have seen an increase with over 330 million RuPay debit cards being issued under PMJDY, installation of point of sale (PoS) machines and introduction of UPI, taking total such transactions to over 72 billion in FY22 from only 9.78 billion in FY17. Total RuPay card transactions at PoS and e-commerce have increased from 282.8 million in FY17 to over 1.51 billion in FY22. Clearly, the digital revolution under the Modi government and financial inclusion via PMJDY has been feeding off each other in a seamless manner.
The Modi government has given a further fillip to PMJDY by extending the benefits of its flagship insurance schemes, PM Jeevan Jyoti Bima Yojana (PMJJBY) and PM Suraksha Bima Yojana (PMSBY) to PMJDY account holders, thereby improving these account holders to micro-credit and micro-investment plans such as flexi-recurring deposits.
PMJDY is a national mission on financial inclusion. In addition, the beneficiaries get a RuPay Debit card having in-built accident insurance cover of Rs 2 lakh for accounts opened after August 2018 and Rs 1 lakh cover for those opened before that period. Technological issues like poor connectivity and glitches in online transactions have been effectively addressed in mobile transactions in the last seven years. In fact, technology has been used befittingly as a big enabler, something that never happened meaningfully, prior to 2014, under successively incompetent Congress regimes. As of the beginning of FY 2022-23, RuPay was accepted in over 200 countries at 42.4 million PoS locations and 1.90 million ATMs. Strong steps are being taken by the Modi government to globalise this indigenous payment method.
Former PM Rajiv Gandhi had said that in India, from the 1980s, out of 100 paise of benefits, only 15 paise reached the true beneficiary. The remaining 85 paise was gobbled up by middlemen and sarkaari babus. Thanks to PM Modi’s Digital India, 100 percent of all benefits reach the beneficiary through DBT.
Coming back to Jan Dhan, more than 1.48 lakh ‘Bank Mitras’ became a part of PMJDY, to ensure that it reaches India’s remotest and the poorest. Under PM Garib Kalyan Yojana (PMGKY), a sum of over Rs 30,945 crore was credited into the accounts of women PMJDY account holders during the Covid lockdown.
‘Banking the Unbanked’ pertains to opening basic savings bank deposit (BSBD) accounts with minimal paperwork, relaxed KYC, e-KYC, account opening in camp mode, zero balance & zero charges. ‘Securing the Unsecured’ pertains to the issuance of indigenous debit cards for cash withdrawals and payments at merchant locations. ‘Funding the Unfunded’ pertains to other financial products like micro-insurance, overdraft for consumption, micro-pension and micro-credit. Jan Dhan accounts are online accounts in the core banking system of banks, in place of the earlier method of offline accounts. Interoperability through RuPay debit cards or Aadhaar-enabled Payment Systems (AePS) has been force multipliers.
The Modi government decided to extend the comprehensive PMJDY program beyond 2018, with some modifications. The focus shifted from ‘Every Household’ to ‘Every Unbanked Adult’. Free accidental insurance cover on RuPay cards was increased from Rs 1 lakh to Rs 2 lakh for PMJDY accounts opened after August 28, 2018. The scheme also provides Rs 2 lakh for accidental death and full disability and Rs 1 lakh for partial disability, for a premium of just Rs 12 per annum. Enhancement in overdraft (OD) facilities was enabled, with OD limit doubled from Rs 5000 to Rs 10,000 and with OD up to Rs 2000 given without conditions. The upper age limit for OD was also raised from 60 to 65 years.
PMJDY has been the foundation stone for people-centric economic initiatives. Whether it is direct benefit transfers, Covid-related financial assistance, PM-KISAN, increased wages under MGNREGA, or life and health insurance cover, the first step of all these initiatives is to provide every adult with a bank account, which PMJDY has been doing on a war footing. One in two bank accounts opened between March 2014 and March 2022 was a PMJDY account. Within 10 days of the nationwide lockdown, more than 20 crore women’s PMJDY accounts were credited with ex-gratia. PMJDY provides an avenue to the poor to bring 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 infamous, usurious money lenders. PMJDY has brought the unbanked into the banking system, expanded the financial architecture of India and brought financial inclusion to almost every adult. In today’s post-Covid times, we have witnessed remarkable swiftness and seamlessness with which direct benefit transfer (DBT) has empowered and provided financial security to the vulnerable sections of society.
The Modi government is further strengthening the PMJDY by extending facilities for micro insurance including life and accident cover for all account holders under the scheme. It is working out a roadmap for greater financial inclusion which will focus on doorstep banking, digital financial products and convergence with its flagship pension and insurance schemes.
Financial inclusion is a national priority of the Modi government, as it is an enabler for holistic growth. The journey of PMJDY-led interventions undertaken over a short span of nine years has, in effect, produced both transformational as well as directional change, thereby making the emerging financial ecosystem capable of delivering financial services to the last person of society and the poorest of the poor. The underlying pillars of PMJDY, namely ‘Banking the Unbanked’, ‘Securing the Unsecured’ and ‘Funding the Unfunded’ have made it possible to adopt a multi-stakeholders collaborative approach, while leveraging technology for serving the unserved and underserved areas as well. No government in post-independent India has embraced welfarism within the larger framework of a capitalist order as seamlessly as the Modi government and that speaks volumes about PM Narendra Modi’s commitment to a socio-economic order that encourages all the three — egalitarianism, free markets and competition.
Sanju Verma is an Economist, National Spokesperson of the BJP and the Bestselling Author of ‘The Modi Gambit’. Views expressed are personal.
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