The Jan Dhan Yojana is gathering steam
Mains Paper 2: Polity
Prelims level: Jan Dhan Yojana
Mains level: Signifiance of the Jan Dhan Yojana
The NDA’s Pradhan Mantri Jan Dhan Yojana (PMJDY) seems to be delivering
well on its financial inclusion objectives without placing undue burden on
The aggregate deposits in the PMJDY accounts are currently nudging ₹1
lakh crore, having grown ten-fold from the ₹10,500 crore in the first phase
of the scheme in January 2015.
After witnessing a sharp spike and then a moderation in the three months
immediately following the note ban in 2016, deposit flows into JDY has
settled down to a brisk 25 per cent growth rate in the last two financial
Though they still make up less than 1 per cent of banks’ deposit base,
their sustained growth in a year when deposit flows were hard to come by,
has helped shore up banks’ CASA (Current Account Savings Accounts) balances.
Success of PMJDY
The PMJDY has delivered financial inclusion on three counts.
One, it has contributed to financialisation of savings by giving lower
income households access to a safe investment product.
Two, with 13.5 crore beneficiaries enrolling for the low-cost accident
insurance cover and 5.5 crore for the life cover, the account is giving
disadvantaged folks a look-in to other financial products.
Three, with 27.7 crore account holders now armed with Rupay debit cards,
their transition to electronic payments has gotten a leg-up too. But now
that JDY deposit flows are shoring up banks’ CASA, the Centre must nudge
them to offer much-needed loan products to these account holders.
Allowing them to build up a credit and transaction history in the
banking system is critical to wean them away from the grip of usurious money
lenders who extract a heavy price on their finances when emergencies strike.
Using a dashboard approach to track the value and number of overdrafts
sanctioned on the PMJDY portal would be a good way to achieve this.
The Centre and the RBI also need to make sure that these first-time
adopters are treated well at bank branches, know the grievance redressal
mechanisms and are aware of, and protected from, the consequences of fraud
or misuse of their accounts.
The sharp spike in the JDY account balances during the note ban months
was a red flag on this score.
Rather than persisting with account opening or deposit targets for banks
on JDY, regulators must now ratchet up their education efforts to make sure
that JDY holders are aware of their rights and don’t fall prey to benami
holders or money-launderers seeking to exploit their banking access.