The Gist of Kurukshetra: January 2015
Jan Dhan Yojana – National Mission of Financial Inclusion
Financial inclusion or inclusive financing is the delivery of
financial services at affordable costs to sections of disadvantaged and low
income segments of society. An estimated 2.5 billion working age adults globally
have no access to the types of financial services delivered by regulated
financial institutions. It is argued that as banking services are in the nature
of public good; the availability of banking and payment services to the entire
population without discrimination is the prime objective of financial inclusion
Indian economy is the second fastest growing economy in the
world. Majority of the population in India resides in rural areas. Thus
development of rural India is a key step towards economic development for a
country like ours.
Even after 60 years of independence a large section of Indian
population still remains unbanked. This malaise has led to generation of
financial instability and pauperism among the lower income groups who do not
have access to financial products and services. The issue of financial inclusion
is emerging as the new paradigm of economic growth. Financial inclusion plays a
major role in driving away poverty from the country. The main focus of financial
inclusion in India is to promote sustainable development and generate employment
in rural areas. In India 40% of people, lack access to even basic financial
services like savings, credit and insurance facilities.
Why Financial Inclusion?
The policy makers have been focusing on financial inclusion of Indian rural
and semi-rural areas primarily for three reasons:
Providing formal credit avenues: So far the
unbanked population has been vulnerably dependent on informal channels of
credit like family, friends and moneylenders. Availability of adequate and
transparent credit from formal banking channels shall allow the
entrepreneurial spirit of the masses to increase outputs and prosperity in
Plug gaps and leaks in public subsidies and welfare
A considerable sum of money that is meant for the poorest of the poor does
not actually reach them while the money meanders through large system of
government bureaucracy, much of it is widely believed to leak and is unable to
reach the intended parties. This laudable effort is expected to reduce
government’s subsidy bill and provide relief only to the real beneficiaries. All
these efforts require an efficient and affordable banking system that can reach
out to all. Therefore, there has been a push for financial inclusion.
Prime Minister Narendra Modi announced the Pradhan Mantri Jan Dhan Yojana or
the Prime Minister ‘Scheme for People’s Wealth’ - an ambitious scheme for
comprehensive financial inclusion on his first Independence Day speech on
August, 15, 2014. With the slogan “Mera Khata - Bhagya Vidhata”, the scheme is a
financial inclusion scheme covering all households in the country with banking
facilities, ensuring a bank account for each household. The scheme was formally
launched on August 28, 2014 with a target to provide universal access to banking
facilities starting with Basic Banking Account with overdraft facility of Rs.
5000, after six months and RuPay Debit Card with inbuilt accident insurance
cover of Rs. 1 lakh and RuPay Kisan card.