As the Narendra Modi government's flagship scheme Pradhan Mantri Jan Dhan Yojana (PMJDY) completes one year on Friday with 174.5 million accounts and a total deposit of Rs 20,769.33 crore, the goalpost for banks is now likely to shift.
The scheme, billed as the largest financial inclusion exercise in the world, was first announced by Prime Minister Narendra Modi on August 15, 2014. It took off on August 28 with a target to open 75 million accounts by Jan 2015.
While zero balance accounts under the PMJDY have declined from 76% in September 2014 to 46.93% in July 2015, banks have been directed to step up efforts to bring down the number of inactive accounts, and start giving out loans to all qualified customers.
"My assessment is that the inactive accounts would come down to 10% or even less than that in the next few months," Hasmukh Adhia, secretary, department of financial services, told HT.
The government is likely to transfer food and kerosene subsidies directly into the bank accounts of beneficiaries from September on a pilot basis, a move which is expected to eliminate frauds and bring down the subsidy bill. According to rating agency Crisil, the Centre's subsidy bill could fall by 20%, or Rs 25,000 crore a year, once the direct benefit transfer (DBT) scheme is fully implemented.
Chief economic adviser Arvind Subramanian earlier had said the DBT scheme, which is being described as a 'game changer' has already brought down sales of subsidised LPG cylinders by about 25%. According to official estimates, savings could touch Rs 12,700 crore in 2014-15 alone.
Animesh Chauhan, MD and CEO, Oriental Bank of Commerce, said savings accounts opened by the lender under the scheme are mostly operational, and once the government starts directly transferring the subsidy amount into these bank accounts, there would be very few inactive accounts. "Automatically most accounts would start to function once the subsidy amounts are transferred and this would also boost rural spending," Chauhan said.
The finance ministry, which recently kicked off a new reform agenda for public sector banks, Indradhanush, has asked lenders to focus on financial inclusion. Besides, banks have been told to disburse Rs 1,22,188 crore to small businesses as part of Mudra loans under the Pradhan Mantri Mudra Yojana.
Simplified know your customer (KYC) norms have also been instrumental to the PMJDY's success. The voter ID card, which had the permanent address of the native village, is enough for opening a zero balance account under Jan Dhan. A RuPay debit card, Rs 1 lakh accident insurance cover, a Rs 30,000 life insurance policy, and loan benefit of up to Rs 5,000 are the freebies comes with the account.
Finance minister Arun Jaitley, while presenting Budget 2015, also announced a slew of social security schemes - Jan Suraksha.