Public banks prop up Jan Dhan as pvt lenders falter
India’s state-run banks helped drive the tally of Jan Dhan bank accounts in the year ended March 31, offsetting a weaker performance by private lenders in the government’s flagship financial inclusion programme, data reviewed by Mint showed.
Launched in August 2014, the Pradhan Mantri Jan-Dhan Yojana (PMJDY) aims to provide universal access to banking with at least one basic bank account for every household.
Private banks counted 55,349 fewer Jan Dhan bank accounts as of end-March, compared to the start of FY21. State-run lenders, meanwhile, continued to power the programme’s reach.
As of March 24 — the latest available data — the total number of such basic savings accounts stood at 420.8 million for all banks, up from 380.7 million as of April 1, 2020, showed data from the PMJDY website. This is the aggregate of public sector banks, regional rural banks and private banks.
Although on a net basis, Jan Dhan accounts at private banks saw a decline of more than 55,000, some individual private banks recorded steeper contractions. For instance, ICICI Bank Ltd, one of India’s largest private-sector banks, ended the fiscal with 278,522 fewer Jan Dhan bank accounts than in April last year. Others such as Karur Vysya Bank, Kotak Mahindra Bank, RBL Bank and Yes Bank also saw a similar trend, albeit of varying proportions.
“ICICI Bank has the largest number of Jan Dhan accounts among private sector banks. Some accounts, which were inoperative for a few years, were closed last year. Since they were dormant accounts, their closure did not cause inconvenience to customers,” an ICICI Bank spokesperson said in an emailed statement. The other banks cited above did not respond to emailed queries.
In stark contrast to their private peers, accounts at state-owned lenders grew 29 million between April 1, 2020, and March 24, 2021.
A senior public sector banker in charge of financial inclusion said that while there used to be several inoperative Jan Dhan accounts earlier, the situation has changed post-covid.
“With the Centre crediting accounts with funds under various covid-19 schemes, the trend has reversed. While some accounts could have been closed because of inactivity, that is not the sole reason,” the banker said.
As of January 15, 2020, 18.7% of Jan Dhan accounts were inoperative, data presented in the Parliament showed. A bank account turns inoperative if there are no transactions for two years. Bankers and sector experts said some banks may have closed some such accounts after finding duplication in some of them. According to guidelines, a customer cannot have multiple basic accounts in different banks.