Pradhan Mantri Jan Dhan Yojana (PMJDY)

Rationale for PMJDY

• 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.
• PMJDY was announced by PM Narendra Modi on 15^th August 2014.
• The underlying pillars of PMJDY are Banking the Unbanked, Securing the Unsecured and Funding the Unfunded.
• 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.

Objectives:

• Ensure access of financial products & services at an affordable cost
• Use of technology to lower cost & widen reach

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.

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 eligible adult
• 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

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.

Impact of PMJDY

• PMJDY has been the foundation stone for 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 of all these initiatives is to provide every adult with a bank account, which PMJDY has nearly completed.
• One in 2 accounts opened between Mar’14 to Mar’20 was a PMJDY account. Within 10 days of nationwide lockdown more than about 20 crore women PMJDY accounts were credited with ex-gratia.
• Jandhan 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. 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 COVID-19 times, we have witnessed the remarkable swiftness and seamlessness with which Direct Benefit Transfer (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 preventing systemic leakage.

Achievements of PMJDY

• PMJDY Accounts have grown three-fold from 14.72 Crore in Mar’15 to 43.04 Crore as on 18-08-2021
• 55% Jan-Dhan account holders are women and 67% Jan Dhan accounts are in rural and semi-urban areas
• Out of total 43.04 crore PMJDY accounts, 36.86 crore (86%) are operative
• Total RuPay cards issued to PMJDY accountholders: 31.23 Crore
• Under PM Garib Kalyan Yojana, a total of Rs. 30,945 crore have been credited in accounts of women PMJDY account holders during Covid lockdown
• About 5.1 crore PMJDY accountholders receive direct benefit transfer (DBT) from the Government under various schemes

Way Forward and Conclusion

• 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.