Pradhan Mantri Jan Dhan Yojana (PMJDY)

Ministry of finance

Slogan of the Scheme is “Mera Khatha, Bhagya Vidhatha” (meaning “My account, fate restorer”)

About Pradhan Mantri Jan Dhan Yojana (PMJDY):

• Pradhan Mantri Jan Dhan Yojana (PMJDY) is a financial inclusion program of the Government of India open to Indian citizens (minors of age 10 and older can also open an account with a guardian to manage it),
• It aims to expand affordable access to financial services such as bank accounts, remittances, credit, insurance and pensions.
• This financial inclusion campaign was launched by the Prime Minister of India  on 28 August 2014. He had announced this scheme on his first Independence Day speech on 15 August 2014.
• Run by Department of Financial Services, Ministry of Finance.
• Under this scheme 15 million bank accounts were opened on inauguration day.
• The Guinness Book of World Records recognized this achievement, stating: “The most bank accounts opened in one week as a part of the financial inclusion campaign is 18,096,130 and was achieved by the Government of India from August 23 to 29, 2014”.
• By 27 June 2018, over 318 million bank accounts were opened and over ₹792 billion were deposited under the scheme.
• The scheme was launched after the failure of previous government schemes, including Swabhimaan. Swabhimaan was a 2011 campaign of the Government of India which aims to bring banking services to large rural areas.

Salient features of the PMJDY

• All households across the country – both rural and urban are to be covered under the scheme. Bank accounts will be opened for 15 crore poor persons.
• All bank accounts opened under the scheme are to have an overdraft facility of Rs 5,000 for Aadhar-linked accounts after satisfactory operation in the account for 6 months.
• Issuance of RuPay Debit Card with inbuilt Rs 2 lakh personal accident insurance cover. The increased coverage amount of Rs. 2 lakh is for PMJDY accounts opened after 28.08.2018.
• A minimum monthly remuneration of Rs 5,000 to business correspondents who will provide the last link between the account holders and the bank.

Benefits under PMJDY

1. One basic savings bank account is opened for unbanked person.
2. There is no requirement to maintain any minimum balance in PMJDY accounts.
3. Interest is earned on the deposit in PMJDY accounts.
4. Rupay Debit card is provided to PMJDY account holder.
5. Accident Insurance Cover of Rs.1 lakh (enhanced to Rs. 2 lakh to new PMJDY accounts opened after 28.8.2018) is available with RuPay card issued to the PMJDY account holders.
6. An overdraft (OD) facility up to Rs. 10,000 to eligible account holders is available.
7. PMJDY accounts are eligible for Direct Benefit Transfer (DBT), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), Micro Units Development & Refinance Agency Bank (MUDRA) scheme.

Objective of Pradhan Mantri Jan Dhan Yojana (PMJDY)

Objective of “Pradhan Mantri Jan-Dhan Yojana (PMJDY)” is ensuring access to various financial services like availability of basic savings bank account, access to need based credit, remittances facility, insurance and pension to the excluded sections i.e. weaker sections & low income groups. This deep penetration at affordable cost is possible only with effective use of technology.

PILLARS OF THE SCHEME

The scheme was launched based upon the following 6 pillars:

• Universal access to banking services  – Branch and BC
• Basic savings bank accounts with overdraft facility of Rs. 10,000/- to every household 
• Financial Literacy Program– Promoting savings, use of ATMs, getting ready for credit, availing insurance and pensions, using basic mobile phones for banking
• Creation of Credit Guarantee Fund – To provide banks some guarantee against defaults
• Insurance – Accident cover up to Rs. 1,00,000 and life cover of   Rs. 30,000 on account opened between 15 Aug 2014 to 31 January 2015
• Pension scheme for Unorganized sector

Implementation of the scheme

The mission will be implemented in two phases, the details of which are as follows.

Phase I – 15 August 2014 – 14 August 2015

• Universal access to banking facilities for all households across the country through a bank branch or a fixed point Business Correspondent (BC) within a reasonable distance.
• To cover all households with atleast one basic banking account with RuPay Debit Card with inbuilt Rs 1 lakh accident insurance cover.
• Financial literacy programme to be taken to the village level.
• Expansion of Direct Benefit Transfer under various government schemes through bank accounts of the beneficiaries.
• Issuance of Kisan Credit Card is also proposed

Phase II – 15 August 2015 – 14 August 2018

• Providing micro-insurance to the people.
• Unorganised sector pension schemes like Swavalamban through the Business Correspondents.

Phase III – beyond 14 August 2018

• The flagship financial inclusion program (PMJDY) will focus on opening accounts from “every household to every adult”.
• Existing Over Draft (OD) limit of Rs 5,000 to be raised to Rs 10,000.
• There will not be any conditions attached for OD upto Rs 2,000.
• Age limit for availing OD facility to be revised from 18-60 years to 18-65 years.

Under the expanded coverage from “every household to every adult”, accidental insurance cover for new RuPay card holders to be raised from Rs 1 lakh to Rs 2 lakh to new PMJDY accounts opened after 28.8.18.

Achievements under PMJDY –

• Total Number of PMJDY Accounts (as of 19^th August 2020) is 40.35 Crore; Rural PMJDY accounts 63.6%, Women PMJDY accounts 55.2%. Out of the total of 40.35 crore PMJDY accounts, 34.81 crores (86.3%) are operative.
• Total deposit balances under PMJDY Accounts stand at Rs. 1.31 lakh crore.
• During the first year of the scheme 17.90 crore PMJDY accounts were opened.
• Deposits have increased about 5.7 times with an increase in accounts 2.3 times between 2015 to 2020.
• A mobile application named Jan Dhan Darshak App was launched to provide a citizen-centric platform for locating banking touchpoints such as bank branches, ATMs, Bank Mitras, Post Offices, etc.

Criticism

The scheme has been criticized by opposition as an effort to please voters that has created unnecessary work-burden on the public-sector banks. According to the experts, offers like zero balance, free insurance and overdraft facility would result in duplication. Many individuals who already have bank accounts may have had accounts created for themselves, lured by the insurance covers and overdraft facilities. As per the scheme, a very few people are eligible to get the life insurance worth ₹30,000 with a validity of just five years.The claimed overdraft facility has been completely left upon the banks. As per the government notice, only those people would get the overdraft facility whose transaction record has satisfactory operations in their account for some time. In March 2018, the Government of India stated that around 20% of Jan Dhan accounts were lying dormant.

In addition, while the Indian Government was actively attempting to promote financial inclusion through this scheme, the Reserve Bank of India, permitted banks to charge customers for conducting ATM transactions beyond a certain number of times per month. This effectively prevented people from easily accessing their own savings and discouraged them from using formal banking channels

Conclusion

Financial inclusion cannot be achieved only by meeting the target numbers. The RBI Governor, Raghuram Rajan had cautioned banks on the risks involved in just hunting for number with regard to Jan-Dhan Scheme, asking them not to compromise on core objective of the programme. ”When we roll out the scheme, we have to make sure it does not go off the track. The target is universality, not just speed and numbers.” The scheme can be a “waste” if it leads to duplication of accounts, if no transaction happens on the new accounts and if the new users get bad experiences.

SOURCE: PMJDY

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