The Pradhan Mantri Jan Dhan Yojana was among a slew of schemes that were launched when the present NDA Government came to power in 2014. Did it give access to banking facilities for the rural Indian? How helpful was the Life Insurance cover provided by PMJDY? Which instruments really helped the unbanked Indian by opening a bank account? According to the World Bank Findex Report only 53% of Indians had a bank account in 2014 compared to the figure of 36% in 2011. The figure for Mobile Banking was even lower at only 2% of the population. The rise in the numbers was very slow and thus, the need for this scheme was felt.The aim of the scheme was to bank the unbanked and then extend other government services through a combination of Aadhaar Cards and RuPay Debit Cards.
This scheme is crucial for many reasons. Firstly, it promotes savings among the general populace. Moreover, it promotes formal credit channels and protects the people from unscrupulous money lenders. Lastly, it puts a check on leakages in the public welfare system. At the time of the launch of the scheme, the government included a lot of deliverables such as a Household Insurance Cover of INR 1,00,000 and an individual overdraft facility of INR 5,000. Four years have passed since the launch of the scheme and the time for an on ground assessment is right to differentiate the tangible from the claims .
Jan Dhan Yojana should not be looked upon in isolation. It is a part of a scheme, where various government policies have been interlinked with an aim of spreading welfare. The biggest benefit of the Jan Dhan Yojana has been the fact that monetary benefits associated with various government schemes are now directly reaching the intended people instead of the middle men. In Krishna district of Andhra Pradesh, banana farmers are receiving payments in cheques instead of cash, upon selling their produce in Vijaywada1. Similarly, under the Ujjwala Yojana gas connections have been given to many rural households. The PMJDY has also been linked to various government insurance schemes like Pradhan Mantri Bima Yojana and Pradhan Mantri Suraksha Bima Yojana. These schemes essentially help families get up on their feet again in case some casualty happens with the bread earner. For example, in Polavaram village of Andhra Pradesh, closed ones of deceased received the insurance amount within a week of the death . Without having a bank account, it would be very difficult to transfer the benefits of these schemes. PMJDY has also impacted on the social side. It has been noticed that earlier men used to spend their earnings from various schemes on alcohol. Now this has been curbed in some places according to a study by The State Bank of India’s Economic Research Wing. This is because money in bank is less luring as compared to cash, with regards to spending on intoxicants. The same study also showed that states with higher adoption of PMJDY have had a meaningful drop in inflation.
All that being said, we still have a long way to go before we idolize PMJDY. Let’s see how and where this scheme fails to meet its major underlying objectives. The foremost issue complies with the overdraft facility. Due to the overdraft facility of INR 3000, a lot of people have opened PMJDY accounts to avail the facility. This led to people opening multiple accounts and not actually using these accounts. According to a Microsave study done in 2016, it was inferred that there were 33% duplicate accounts.
The scheme further states that a life insurance cover of INR 30000 was to be provided to each PMJDY account holder. But the implementation of this insurance is left to the banks who will be creating the PMJDY accounts. The absence of a standard guideline for the above opens the possibility for the banks to manipulate the account holders by selling them different financial instruments in the name of insurances .
Though people have opened PMJDY accounts, a 2016 study by Yakshup Chopra and Prasanna Tantri, researchers at the Indian School of Business, and University of Maryland professor Nagpurnanand R. Prabhala, shows that 28% of these accounts have remained non-operational for the last 6 months.
Also there is a severe issue of concern that to decrease the number of zero balance accounts, a lot of banks have tried to tamper with the statistics by depositing INR 1 the accounts.
On the functional side, ATMs too have started to become a thorn in the shoe. RBI in 2014 had permitted banks to levy charges on transactions through ATMs beyond a certain number of transactions. Further, field studies have shown that there has been a dearth of functional ATMs in rural areas. Although the government had distributed Rupay debit cards to all those opening accounts under Jan Dhan Yojana but such bottlenecks with ATMs deter the account bearers from availing the facilities.7 There are hardly any ATM and bank branches which are disabled-friendly. It is also very hard for them to get the documents required for opening up the account under the Jan Dhan Yojana. Financial inclusion schemes have not been devised keeping in mind the disabled and the elderly section of the society .
On the financial front, instruments which are offered are designed keeping in mind the salaried segment. Farmers and other people who do not have regular income but earn money in spurts cannot utilise the benefits of such instruments. There is a need to customise the instruments for all the segments of the unbanked. Of the total 29.6 crore new bank accounts opened, nearly 60% belong to the rural people .
The Jan Dhan Yojna by the NDA government was music to the ears during the times before its launch. The amalgamation of ‘financial inclusion’ to it brought the necessary light it needed. But as the scheme rolled off, there were visible pitfalls as well as deviations from what was expected out of it from both the government and the banks involved. If the PMJDY accounts were seeded to Aadhar details, then the duplication of the bank accounts could be thwarted and the actual performance of PMJDY can be measured. Jan dhan yojana is currently under department of financial services which already has a lot of initiatives and responsibilities. There is a need for separate body to monitor the developments under this scheme.
Thus, there is a need of severe reforms to be taken if the government wants to make the scheme stand out of the box and not let it dissolve like the other government schemes .
- The World Bank (2014), Financial Inclusion Data/ Global Findex. Retrieved from http://datatopics.worldbank.org/financialinclusion/country/india,
- Guntiro Naga Sridhar (2016, February 15) The Hindu Business Line. Retrieved from https://www.thehindubusinessline.com/specials/india-file/polavaram-is-reaping-the-jan-dhan-benefit/article8241246.eceNupur Anand, Business Standard (2016, March 12),
- Duplicate accounts under Jan Dhan plan rising: Survey. Retrieved from https://www.business-standard.com/article/finance/duplicate-accounts-under-jan-dhan-yojana-on-rise-116031100992_1.html
- Nazim Khan, Money Control (2014, Sep 03), Critics attack ‘wasteful, ineffective’ PM Jan Dhan Yojana. Retrieved from https://www.moneycontrol.com/news/business/economy/critics-attack-wasteful-ineffective-pm-jan-dhan-yojana-1328517.html\
- Yakshup Chopra, Prasanna Tantri, researchers at the Indian School of Business, and University of Maryland professor Nagpurnanand R. Prabhala. Retrieved from https://www.livemint.com/Opinion/wfertnZlyGRTmGiyGnJLrI/The-admirable-success-of-the-JanDhan-Yojana.html
- Anuj Srivas, The Wire (2017, Sep 14), Jan Dhan Yojana, One Rupee Balance and the Dormancy-Duplication Problem. Retrieved from https://thewire.in/economy/jan-dhan-yojana-one-rupee-balance-dormancy-duplication-problem
- Charan Singh, The Wire (2017, Sep 01), Jan Dhan at Three: Need for Linking Financial Inclusion to Socioeconomic Development. Retrieved from https://thewire.in/economy/jan-dhan-three-need-linking-financial-inclusion-socioeconomic-development