Over 400 million poor now have access to banks due to Pradhan Mantri Jan Dhan Yojana: Finance ministry

Hindustan Times, New Delhi | ByRajeev Jayaswal
Aug 28, 2020 10:18 PM IST

The Pradhan Mantri Jan Dhan Yojana has become the basis of direct transfer of cash subsidy to the poor and was launched in August 2014

The Pradhan Mantri Jan Dhan Yojana (PMJDY), the country’s financial inclusion initiative that was launched six years ago, has more than 403.5 million accounts with total deposits in excess of Rs 1.30 lakh crore, the Union finance ministry said.

(Reuters file photo for representation)
(Reuters file photo for representation)

The scheme, which has become the basis of direct transfer of cash subsidy to the poor, was announced by Prime Minister Narendra Modi in his Independence Day speech on August 15, 2014, and was launched on August 28 that year.

“Today, six years ago, the PMJDY was launched with an ambitious aim of banking the unbanked. This initiative has been a game-changer, serving as the foundation for several poverty alleviation initiatives, benefitting crores of people,” PM Modi tweeted on Friday.

The government is planning to expand the scheme to provide insurance coverage to PMJDY account holders. “Eligible PMJDY account holders will be sought to be covered under PMJJBY [Pradhan Mantri Jeevan Jyoti Bima Yojana] and PMSBY [Pradhan Mantri Suraksha Bima Yojana]. Banks have already been communicated about the same,” it said in a statement.

The government is also planning to promote digital payments, including RuPay debit card usage, among PMJDY account holders through creation of acceptance infrastructure across the country and provide access of the account holders to micro-credit and micro investment facilities, it added.

According to the statement, as on August 19, out of the total PMJDY account holders, 63.6% were in rural areas and 55.2% accounts belonged to women. “Thanks to the PMJDY, the future of several families has become secure. A high proportion of beneficiaries are from rural areas and are women,” the PM said in another tweet.

Financial inclusion is a national priority of the government, as it is an enabler for inclusive growth, the finance ministry said. “It is important as it provides an avenue to the poor for bringing their savings into the formal financial system, an avenue to remit money to their families in villages besides taking them out of the clutches of the usurious money lenders,” it added.

“The PMJDY has been the foundation stone for the Modi government’s people-centric economic initiatives. Whether it is direct benefit transfers (DBTs), coronavirus disease (Covid-19) financial assistance, PM-KISAN, increased wages under the MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act, 2005], life and health insurance cover, the first step was to provide every adult with a bank account, which PMJDY has nearly completed,” finance minister Nirmala Sitharaman said.

The PMJDY became an important instrument to expeditiously provide relief to the poor under the Pradhan Mantri Garib Kalyan Package that was announced on March 26. The package provided an amount of Rs 500 per month for three months to women PMJDY account holders.

“A total of Rs 30,705 crore have been credited in accounts of women PMJDY account holders during April-June,” the statement said.

Besides, about 80 million PMJDY account holders receive DBT from the government under various schemes.

The scheme involves opening of basic savings bank deposit accounts with minimal paperwork. The process of account opening is simple with relaxed know-your-customer (KYC) norms. These accounts are zero balance and zero charge accounts. Account holders are issued indigenous debit cards with free accident insurance coverage of Rs 2 lakh.

In August, about 86.3% (348.1 million) accounts were operative, the statement said.

As per the guidelines of the Reserve Bank of India (RBI), a PMJDY account is treated as inoperative, if there are no customer induced transactions in the account for over a period of two years.

At present, these accounts have a deposit balance of Rs 1.31 lakh crore, with an average deposit of Rs 3,239 per account. The average deposit per account has increased 2.5 times, which indicates increased usage of accounts and inculcation of saving habit among the account holders, it said.

The PMJDY account holders can also take help of ‘Jan Dhan Darshak App’, a mobile application, for locating banking touchpoints such as bank branches, automated teller machines (ATMs), Bank Mitras and post offices, it said.

There are over eight lakh banking touchpoints, it added.

Divakar Vijayasarathy, founder and managing partner at consulting firm DVS Advisors LLP, said by opening nearly 17 crore bank accounts in the very first year under PMJDY, the government had demonstrated its resolve, but it has to be taken forward. “However, the job is only half done... Other schemes such as Bharatnet [rural broadband network] have to be parallely and vigorously implemented to achieve the optimum benefit. Increasing digital literacy, rural banking facilities and internet connectivity would be crucial in this regard,” he said.

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